Crisil Ratings assigns 'A1+' rating to commercial paper of Paradeep Phosphates

Crisil Ratings stated that the rating factors in the company?s well-established market position in the fertiliser industry being the third largest manufacturer of complex fertilisers, diversified product portfolio, strong pan-India distribution, its strong operating efficiency aided by backward integration and long-term raw material supply agreements.

The business risk profile is supported by healthy operating performance as reflected in increased revenue of Rs 13,806 crore with earnings before interest, tax, depreciation and amortisation (EBITDA) margin of 9.1% in fiscal 2025, compared to Rs 11,563 crore and 5.5%, respectively, in fiscal 2024.

This was driven by growth in sales volume and realisations mainly in the complex fertilizer segment. Profitability improved with upward revision in nutrient-based subsidy (NBS) rates and higher backward integration with increase in phosphoric acid capacity to 5 lakh metric tonne per annum (MTPA) from 3 lakh MTPA in the second quarter of fiscal 2024.

The company is backward integrating by increasing sulfuric acid and phosphoric acid capacities. Operating profitability is expected to remain healthy with EBITDA per tonne sustaining above Rs 5,000 per metric tonne (MT) on steady-state basis supported by backward integration, long-term supply agreements and NBS rates in line with international raw material prices on a steady-state basis.

Crisil Ratings also notes the ongoing merger between PPL and Mangalore Chemicals and Fertilisers (MCFL) subject to requisite approvals. This will likely benefit the business risk profile with synergies in terms of economies of scale, stronger distribution network, joint procurement of raw materials and product diversification.

However, the merger is unlikely to have a material impact on the overall credit profile of PPL given that the contribution to overall profitability of MCFL will be low. The impact of the merger on the consolidated credit profile will remain monitorable.

The financial risk profile is healthy, as indicated by comfortable debt protection metrics with interest coverage ratio of over 4 times for fiscal 2025, against debt of Rs 4,341 crore as on 31 March 2025.

These strengths are offset by exposure to regulatory risks in the fertiliser industry and high working capital requirement with reliance on subsidy.

The fertiliser industry remains highly strategic and controlled by the government, any deferment or delay in disbursing subsidy or any change in the regulatory scenario would be a key rating sensitivity factor.

Paradeep Phosphates is a leading fertilizer manufacturer in India with capacities of 2.6 MMTPA of DAP/NPK fertilisers and 0.4 MMTPA for urea with plants in Paradeep, Odisha, and Zuarinagar, Goa.

For the first three months of fiscal 2026, profit after tax (PAT) was Rs 256 crore on total income of Rs 3,754 crore, against Rs 6 crore and Rs 2,377 crore, respectively, during the corresponding period of the previous fiscal.

The scrip fell 1.97% to currently trade at Rs 167.00 on the BSE.

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