At a Glance
Khaitan Chemicals & Fertilizers Ltd is India’s largest Single Super Phosphate (SSP) manufacturer, but somehow, they manage to turn ₹700 Cr+ revenue into single-digit crores of profit. With ROE of just 0.6%, a P/E ratio of 700+ (lol), and margins that resemble a wet tissue, it’s a wild ride through India’s fertilizer underbelly.
1. 🧨 Introduction with Hook
If fertilizer stocks were school kids, Coromandel would be the topper, RCF the all-rounder, and Khaitan Chemicals? That one kid who attends all classes, writes every exam, but still scores 2 marks in Math and wonders why the teacher hates him.
In a world where input subsidies, government schemes, and agri reforms are tailwinds, how does the #1 SSP producer pull off negative margins and a ROCE of 2.5%?
Let’s enter the urea-scented, sulfur-soaked world of Khaitan Chemicals.
2. 🧪 Business Model – WTF Do They Even Do?
- 💣 Core Product: Single Super Phosphate (SSP) fertilizer, the OG phosphatic fertilizer
- 🧪 By-products: Sulphuric Acid, Oleum, and industrial chemicals
- 🏭 Manufacturing capacity: Over 11 lakh MT of SSP, pan-India presence
- 📦 Brands: “Khaitan SSP” and “Utsav SSP”
- 👨🌾 Target customers: Mostly small and marginal farmers in MP, Rajasthan, Chhattisgarh, UP
- 🛺 Distribution: 3,000+ dealers and distributors
- 📉 Regulatory dependency: Operates in a market where prices, subsidies, and demand are government-controlled (i.e., not capitalism, but babucracy)
3. 🧾 Financials Overview – Profit, Margins, ROE, Growth
| Metric | FY23 | FY24 | FY25 |
|---|---|---|---|
| Revenue | ₹888 Cr | ₹536 Cr | ₹720 Cr |
| EBITDA | ₹78 Cr | -₹30 Cr | ₹23 Cr |
| PAT | ₹42 Cr | -₹70 Cr | ₹1 Cr |
| ROE | 4.34% | -7.27% | 0.14% |
| OPM | 9% | -6% | 3% |
| EPS | ₹4.34 | -₹7.27 | ₹0.14 |
🤣 Highlights:
- Lost ₹70 Cr in FY24, despite ₹536 Cr sales. Respect the hustle.
- FY25 barely clawed back into green with ₹1 Cr net profit.
- ROE of 0.6%, which is even lower than the average interest rate on your FD.
4. 💸 Valuation – Is It Cheap, Meh, or Crack?
| Valuation Metric | Value |
|---|---|
| CMP | ₹103 |
| Market Cap | ₹1,012 Cr |
| Book Value | ₹23 |
| P/E (TTM) | 723x |
| P/B | 4.47x |
| EV/EBITDA | N/A (Because EBITDA is tiny) |
🤡 Translation:
- P/E of 723 means you need to wait till 2747 AD to recover your investment from profits.
- P/B of 4.5x for a company with 2% ROCE is like paying ₹2,000 rent for a tent.
🎯 Fair Value Range?
Let’s assume they somehow reach ₹50 Cr PAT again (peak FY22 level):
- At 10x P/E = ₹500 Cr market cap → FV = ₹51
- At 15x P/E = ₹750 Cr → FV = ₹76
🧮 Fair Value Range = ₹51 – ₹76, assuming a miraculous turnaround. CMP ₹103 = Fully loaded. 🔔
5. 🍜 What’s Cooking – News, Triggers, Drama
- 👨💼 Management Shuffle: Praveen Uniyal appointed as Whole Time Director; signals revamp?
- ⚠️ Credit Rating Downgrade: From IND A- to BBB+ – not exactly investment grade vibes
- 💥 FY24 saw SSP prices crash while Sulphuric Acid demand weakened. Margin massacre ensued.
- 🤝 Farmers delayed purchases due to monsoon delays and late subsidy reimbursements.
🎬 Future triggers:
- Recovery in monsoons + better pricing discipline
- Operational streamlining or capacity consolidation
- Return to ₹50 Cr PAT zone (but let’s not bet the fertilizer plant)
6. 🧾 Balance Sheet – How Much Debt, How Many Dreams?
| Item | FY25 |
|---|---|
| Total Liabilities | ₹620 Cr |
| Equity Capital | ₹10 Cr |
| Reserves | ₹213 Cr |
| Borrowings | ₹318 Cr |
| Debt-to-Equity | 1.4x |
| Net Block | ₹127 Cr |
💣 Key takeaways:
- Debt has doubled since FY22
- Fixed assets stagnant → not much new capex
- They owe banks more than they’ve ever made in net profits since 2000.
7. 💵 Cash Flow – Sab Number Game Hai
| Year | CFO | FCF | CFF | Net Cash Flow |
|---|---|---|---|---|
| FY23 | -₹88 Cr | -₹110 Cr | +₹63 Cr | -₹47 Cr |
| FY24 | -₹55 Cr | -₹70 Cr | +₹54 Cr | -₹0.1 Cr |
| FY25 | ₹44 Cr | ₹30 Cr | -₹27 Cr | ₹0.2 Cr |
- FY23-24 = free fall in operating cash
- Surviving purely via loans and financing
- FY25 rebound mostly due to inventory destocking and working capital tightening
8. 📊 Ratios – Sexy or Stressy?
| Ratio | Value |
|---|---|
| ROE | 0.63% |
| ROCE | 2.47% |
| Interest Coverage | ~1x |
| OPM | 3% |
| NPM | 0.14% |
| Working Capital Cycle | 194 Days |
🧠 Inventory Days: 156
🧠 Debtor Days: 37
🧠 Payables: Only 30 days = tight supplier terms
In short: 🧻 Margins, 🥴 Cash cycle, and 😰 debt.
9. 💸 P&L Breakdown – Show Me the Money
- 12-month Sales: ₹720 Cr
- Gross margin: Barely there
- Net Profit: ₹1 Cr = 0.14% net margin
- Main cost bloat: Energy, sulphur, freight, finance costs
What’s more tragic?
That they sell millions of tons of SSP or that they barely make 1 paisa per kg sold?
10. ⚔️ Peer Comparison – Who Else in the Game?
| Company | CMP | ROCE | ROE | OPM | PAT (TTM) | P/E |
|---|---|---|---|---|---|---|
| Coromandel | ₹2,234 | 24.1% | 17.5% | 10.7% | ₹1,794 Cr | 36.8 |
| Chambal Fert | ₹563 | 27.9% | 20.6% | 14.9% | ₹1,649 Cr | 13.7 |
| Paradeep Phos | ₹160 | 13.9% | 14.4% | 9.1% | ₹552 Cr | 23.7 |
| GSFC | ₹208 | 6.2% | 4.8% | 6.6% | ₹591 Cr | 14.1 |
| Khaitan Chem | ₹103 | 2.5% | 0.6% | 3.0% | ₹1 Cr | 723 😵💫 |
🧨 Verdict? The “leader in SSP” is miles behind in ROCE, profits, and value. The only thing it’s leading in is… confusion.
11. 🎭 Miscellaneous – Shareholding, Promoters
- 👨👩👦 Promoter holding: 72.5% (unchanged)
- 😶 No DII or FII interest – public holds rest
- 📉 Credit Rating: BBB+ post downgrade
- 🧓 JMD: Utsav Khaitan (yes, legacy biz)
- 🧾 No dividend declared since FY23
Even the dividend payout is in hibernation mode. Either they’re hoarding for a rainy day or… it already rained.
12. 🧑⚖️ EduInvesting Verdict™
Khaitan Chemicals is a classic case of “revenue-rich, profit-poor” — India’s largest SSP maker, but with returns worse than your bank’s savings account.
The P/E is a joke, the margins are thinner than a wafer, and the debt is getting heavier than fertilizer sacks in peak monsoon.
✅ Good: Leadership in SSP, pan-India distribution, long-term demand visibility
❌ Bad: Volatile earnings, poor ROE, high debt, credit downgrade, wafer-thin margins
⛔ Final Word? Let the fertilizers flow to farmers, but don’t let hope flow to investors — at least not until the profits return.
✍️ Written by Prashant | 📅 5 July 2025
Tags: Khaitan Chemicals, SSP, Fertilizer stocks, Agrochemicals, ROCE, EduInvesting, BSE Smallcap, India Agriculture, Commodity Stocks, No Buy Sell
