At a Glance
Madras Fertilizers is a Government of India undertaking that manufactures Urea, NPK fertilizers, bio-fertilizers and organic manure under the “Vijay” brand. While FY23 was a bumper year, FY25 profits halved, margins cracked, and… the book value is negative. Yes, NEGATIVE. So why is it still worth ₹1,500 Cr?
1. 🤯 Introduction – When Your Fertilizer Brand Is “Vijay”, But Financials Say “Vinash”
Madras Fertilizers Ltd (MFL) is a classic PSU plotline:
✔️ Decent operations
✔️ Heavy government subsidies
❌ Zero dividend
❌ Contingent liabilities larger than market cap
❌ Book value: ₹-2 per share (not a typo)
And yet the stock delivered 37% CAGR in 5 years. Kya hai yeh chemical locha?
2. 🌾 WTF Do They Even Do?
They make fertilizer and spin sustainability gyaan. Product mix includes:
- Urea & NPK Fertilizers – the usual crop stuff
- Vijay Organic Products – neem-based pesticides, city compost
- Biofertilizers – some greenwashing, some legit
- Agro Chemicals – minimal scale, mostly traded
They sell under the “Vijay” brand. Which ironically hasn’t led to victory in shareholder value (yet).
3. 📊 Financials – Profits Aaye, Book Value Gayi
| Metric | FY23 | FY24 | FY25 |
|---|---|---|---|
| Sales | ₹3,447 Cr | ₹2,228 Cr | ₹2,542 Cr |
| EBITDA | ₹332 Cr | ₹104 Cr | ₹122 Cr |
| Net Profit | ₹185 Cr | ₹6 Cr | ₹64 Cr |
| OPM | 10% | 5% | 5% |
| ROCE | 28% | 11% | 10.5% |
| EPS | ₹11.5 | ₹0.35 | ₹3.99 |
Massive FY23 gains were subsidy-driven. FY25 normalized, but not disastrous. The problem? The company has accumulated losses that have burnt through its entire net worth.
4. 💸 Valuation – Cheap? Or Chemically Imbalanced?
- CMP: ₹92.8
- EPS (FY25): ₹3.99
- P/E: 23.3x
- Book Value: ₹-2 (No, seriously.)
🧮 Fair Value Range: ₹45 – ₹70
Valuation adjusted for zero dividend, high government dependency, contingent liabilities, and no visible turnaround trigger.
The stock is not cheap at 23x with no equity cushion. You’re paying for vibes and subsidies.
5. 🔥 What’s Cooking – Fertilizer Subsidies, Losses & PSU Hopes
- FY25 saw profit rebound to ₹64 Cr, mainly due to other income (₹44 Cr).
- Q4 FY25 was a bloodbath (₹52 Cr loss) — margin volatility galore.
- Still no announcement of debt restructuring or equity capital repair.
- Contingent liabilities = ₹807 Cr 🧨
- No dividend ever, not even a token ₹0.50
And yet… PSU-theme traders love it.
6. 🧾 Balance Sheet – Negative Book Value = PSU ka Style
| Metric | FY25 |
|---|---|
| Equity Capital | ₹162 Cr |
| Reserves | ₹-194 Cr ❌ |
| Borrowings | ₹1,594 Cr |
| Net Worth | ₹-32 Cr |
Yes, the company’s net worth is negative. Debt remains high, and reserves are deeply in the red from a decade of losses.
This is a classic “technical revival” play — not a balance sheet one.
7. 💵 Cash Flow – From Deep Red to Mild Green
| Year | CFO | FCF | Net Cash |
|---|---|---|---|
| FY23 | ₹687 Cr | Decent | ₹369 Cr ✅ |
| FY24 | ₹164 Cr | Weak | ₹182 Cr ✅ |
| FY25 | ₹116 Cr | Decent | ₹90 Cr ✅ |
Cash flows have improved, but largely subsidy-driven and not sustainable unless margins stabilize. Capex is minimal.
8. 🧮 Ratios – Rocket Ya Rust Bucket?
| Metric | FY25 |
|---|---|
| ROCE | 10.5% |
| ROE | NA (Net worth is negative) |
| OPM | 5% |
| Debt/Equity | N/A |
| Interest Coverage | ~2x |
| Inventory Days | 54 |
| CCC | 10 Days ✅ |
Not horrible for a PSU… but that ROE? Undefined. Because… negative net worth.
9. 💰 P&L Breakdown – Is There Even a Business?
- Sales dropped 36% from FY23 highs
- FY25 net profit: ₹64 Cr, BUT ₹44 Cr came from Other Income
- Core business EBIT barely broke even in some quarters
- Margins = fully fertilizer subsidy dependent
One bad quarter = full-year wipeout. And FY25 Q4 was exactly that.
10. 🧪 Peer Comparison – Who’s the Fertile One?
| Company | P/E | ROE | OPM | Mcap (₹Cr) |
|---|---|---|---|---|
| Coromandel Intl | 37x | 17.5% | 10.7% | ₹67,000 |
| Chambal Fert | 13.4x | 20.6% | 14.9% | ₹22,000 |
| RCF | 36x | 5.1% | 4% | ₹8,700 |
| Madras Fert | 23x | NA | 5% | ₹1,495 |
It’s a PSU penny stock masquerading as a fertilizer blue-chip. No pricing power, no scale, no FMCG-type brand.
11. 📦 Misc – Promoters, Shareholding & Drama
- Promoter (Govt of India): 85.27%
- FII/DII: Almost zero
- Public Holding: 14.66%
- Retailers: 62,000+ holders (mostly traders betting on PSU re-rating)
Despite recent profitability, no dividend declared ever. Even RCF gives 0.79%.
12. 🧠 EduInvesting Verdict™
“Book Value toh gaya, ab bas PSU theme bacha hai.”
- ✅ PSU Reforms theme
- ✅ Fertilizer subsidy tailwind
- ❌ Zero equity cushion
- ❌ High contingent liabilities
- ❌ No clarity on dividend or recap
You’re not investing in a company. You’re buying hope that someday the Government will recapitalize or merge this PSU. (RCF-MFL merger? Maybe.)
Unless that happens, this stock lives and dies on subsidy timing + retail frenzy.
🚨 High risk, high vibes, zero margin of safety.
✍️ Written by Prashant | 📅 July 3, 2025
Tags: Madras Fertilizers, PSU Stocks, Fertilizer Subsidy India, Negative Book Value Stock, Vijay Fertilizers, EduInvesting, Dividend-less Stocks, Government Undertaking, RCF Merger Rumors, FY25 Fertilizer Earnings
