National Fertilizers Ltd.

Basis: Consolidated income-statement data (FY2022–FY2026) as compiled by StockAnalysis from company filings, cross-checked against NSE results filing of 27 May 2026 (FY2026 and FY2025) and other aggregators. Standalone figures from company filings and press coverage. INR Cr.

Income statement (consolidated)

EPS FY2025 and FY2026 computed as consolidated PAT / 49.058 crore shares; TipRanks reports FY2025 EPS at INR 3.74. The 27 May 2026 filing reports consolidated net profit after tax of INR 211.49 Cr (FY2026) and INR 183.98 Cr (FY2025).

Income statement (standalone)

Note: the company reports "turnover" (a different aggregate) of INR 21,230.67 Cr for FY2026 versus INR 19,532.86 Cr for FY2025; revenue from operations per the audited results is INR 21,514.18 Cr and INR 19,794.50 Cr respectively. Some aggregators (e.g., Torus, Kotak) report FY2025 revenue as INR 19,889.52 Cr (total income basis). These differences arise from definitional choices (inclusion of other operating income, other income), not errors.

Margins (consolidated; computed)

Revenue CAGR FY2022–FY2026 (consolidated): ~7.9% per year (computed). This is largely input-cost and trading-price driven rather than volume driven. Over FY2023–FY2026 revenue declined at a CAGR of roughly -10%, reflecting the unwind of the 2022 gas-price spike.

Quarterly trajectory (consolidated net profit, INR Cr; media reports of company filings)

Q1 FY2027 revenue from operations was INR 4,500.39 Cr (consolidated); standalone PAT was INR 70.91 Cr, versus a standalone loss of about INR 32 Cr in Q1 FY2026. Q1 FY2026 revenue was ~INR 3,534–3,543 Cr depending on definition.

Balance sheet (consolidated; INR Cr; TipRanks compilation of filings)

Notes and gaps:

• NFL's debt is predominantly working-capital borrowing (cash credit and commercial paper) whose level tracks subsidy receivables. ICRA-rated limits total INR 18,600 Cr (cash credit INR 9,000 Cr; non-fund-based INR 9,600 Cr; CP programme INR 4,000 Cr carved out of fund-based limits).

• Finology reports a "borrowings" line declining from INR 629.73 Cr (Jun 2025) and INR 534.71 Cr (Sep 2025) to nil (Dec 2025, Mar 2026, Jun 2026); this appears to refer to long-term borrowings and should be treated as indicative.

• The FY2026 AR notes higher trade receivables, mainly from increased subsidy receivables on manufactured fertilizers.

Cash flow

Qualitatively: (i) operating cash flow is dominated by changes in subsidy receivables, which can swing by thousands of crores year to year; (ii) capex has been modest (energy-saving schemes, bentonite sulphur, WSF plant, pilot plants), with the largest forthcoming commitment being the INR 572.45 Cr equity in AVFCCL spread over the Namrup-IV construction period; (iii) there have been no buybacks. Dividends paid can be approximated from DPS × shares: ~INR 76.5 Cr for FY2025 and ~INR 51.0 Cr for FY2026 (computed).

Ratios (computed from consolidated data above)

FY2026: interest coverage (EBIT/interest) computed at ~1.72x; ROE on FY2025 closing equity ~7.8%. Screener historically reported debtor days improving from ~65 to ~51 days and flagged low interest coverage — consistent with the computed ratios.

Commentary on trends and drivers

1. Revenue is a function of gas and trading prices, not volume. FY2023 revenue nearly doubled (+86.6%) on gas-price pass-through; FY2024 (-20.4%) and FY2025 (-16.0%) reversed it. FY2026's +8.7% came from higher traded-fertilizer volumes and a growing non-urea basket.

2. Profit is structurally thin and policy-determined. Net margins never exceeded 1.6% in five years. FY2023's peak profit (INR 458 Cr) reflected favourable fixed-cost and energy-saving recognition plus subsidy timing; FY2024's collapse to INR 150 Cr consolidated (standalone INR 64.74 Cr) reflected lower trading margins and policy-related cost under-recoveries.

3. RFCL is the swing factor in consolidated earnings. RFCL's stabilisation turned a INR 203 Cr share of loss in FY2022 into profits of INR 85–108 Cr in FY2024–FY2025, narrowing to ~INR 42 Cr in FY2026 (aggregator data).

4. FY2026 inflection. Standalone PBT +124% to INR 232.67 Cr on traded-goods margins, receipt of past subsidy arrears (a partly non-recurring element), and lower marketing/misc. expenses. The auditor drew attention (emphasis of matter) to a note on revenue recognition — typical of CPSE fertilizer accounts where subsidy is recognised on notified/provisional rates pending final determination.

5. Momentum into FY2027. Q1 FY2027 consolidated PAT of INR 113 Cr already equals ~54% of the full FY2026 consolidated profit, though Q1 benefits from seasonality patterns and subsidy-timing effects that may not repeat.

Management guidance

No numerical guidance is issued. Qualitative direction from the FY2026 Annual Report: sustain high urea capacity utilisation, grow non-urea revenue share, commission specialty-nutrient plants at Vijaipur, and fund the Namrup-IV equity commitment.

Consensus growth expectations

No consensus available (see 21.4). Analyst baseline: urea volumes flat to slightly up; earnings driven by trading margins, subsidy timing and RFCL contribution.

Bull case

1. Earnings run-rate has stepped up. Consolidated PAT moved from -39 Cr (Q1 FY2026) to 94 Cr, 118 Cr and 113 Cr in the next three quarters; annualising even part of this implies FY2027 profit well above FY2026's INR 211 Cr, against a market cap of ~INR 3,250 Cr.

2. Diversification is real and accelerating. Non-urea revenue reached 40.34%, agri-input trading grew ~69%, and new Vijaipur plants (WSF/MN INR 208 Cr; bentonite sulphur INR 104 Cr) add market-priced, higher-margin products.

3. Capacity optionality at low cost. JV stakes in RFCL (stabilised per ICRA) and Namrup-IV give NFL exposure to ~25 LMT of efficient capacity for a modest equity outlay, plus marketing volume.

Bear case

1. Profit is policy-contingent and partly one-off. FY2026's 124% PBT rise relied on past subsidy arrears and trading margins that can reverse with NBS rate changes or global price moves; margins have never exceeded 1.6%.

2. Balance-sheet sensitivity to subsidy flows. Rising subsidy receivables in FY2026 and low interest coverage (~1.0–1.7x) leave little cushion if fiscal pressure delays reimbursements.

3. Structural overhangs. Ageing Punjab/Haryana assets face stricter energy norms; the government's dormant 20% OFS plan and weak institutional ownership (institutions down to ~5.5%) limit re-rating potential.

Key catalysts and monitorables (next 12 months)

Concluding analyst verdict

National Fertilizers Limited is a strategically important but financially modest enterprise: a 35.68 LMT urea franchise in India's heartland whose economics are written largely by the Department of Fertilizers. The five-year record shows revenue moving with gas and trading prices — from INR 15,857 Cr in FY2022 to INR 29,584 Cr in FY2023 and back to INR 21,514 Cr in FY2026 — while net margins remained pinned below 1.6%. Shareholders have been compensated mostly through the stability that the regulated model provides, an AA/Stable credit profile, and a dividend now aligned to the CPSE 30%-of-PAT floor, rather than through earnings growth.

FY2026 nonetheless marks a credible inflection. Standalone PBT more than doubled to INR 232.67 Cr, consolidated PAT reached INR 211.49 Cr, urea sales and utilisation hit records, and Q1 FY2027's INR 113 Cr consolidated profit suggests the improvement has carried over. More importantly for the long term, management has made tangible progress diversifying: non-urea products are now about two-fifths of revenue, and a pipeline of small, market-priced projects (bentonite sulphur, water-soluble fertilizers, bio-fertilizers, fortified urea) plus the Namrup-IV equity stake broaden the earnings base without straining the balance sheet.

The constraints remain substantial. Earnings quality depends on subsidy arrears and trading spreads; working capital is hostage to fiscal timing; older plants face efficiency pressure; and governance, ownership concentration and the unresolved 20% OFS limit institutional appetite. At roughly 15x consolidated FY2026 earnings and ~1.4x book, the market is pricing NFL as a low-growth utility rather than a turnaround.

Our synthesis: NFL is a stable, policy-bound income holding with moderate re-rating optionality. Evidence that the post-Q2 FY2026 profit run-rate is sustainable — without reliance on arrears — together with timely commissioning of the Vijaipur specialty plants and Namrup-IV financial closure would justify a more constructive stance. Absent those, returns are likely to track dividends and policy cycles.