At a Glance
Balaji Phosphates is an SME fertilizer manufacturer riding the SSP and NPK wave in India’s agro belt. While it’s growing profits on paper, cash flow is MIA, working capital is ballooning, and promoter dilution has raised some eyebrows. At ₹142 and 42.5x earnings, the stock smells more like urea than unicorn.
1. 🎬 Introduction with Hook
Fertilizer companies are supposed to be boring, right?
Just make phosphate dust, sell to farmers, get subsidy, pay dividend, repeat.
But Balaji Phosphates is not like other fertilizer stocks.
It did a ₹41.6 Cr IPO, grew net profit 5x in 2 years… and yet:
- 🔻 Negative cash flow
- ⏳ 271-day cash cycle
- 🧯 Promoter stake down 30% in one quarter
Ladies and gentlemen, presenting… Balaji “Paper Profit, Real Panic” Phosphates Ltd.
2. 🧩 WTF Do They Even Do? (Business Model)
Balaji manufactures and sells:
🌾 Single Super Phosphate (SSP) – Both powder and granular
🔄 NPK Fertilizers – Multi-grade (12:32:06 to 20:20:00)
⚛️ Zinc Sulphate – 21% & 33% purity
🥽 Fortified SSP – Zincated + Boronated variants
Main buyers? Farmers + agro dealers + government schemes.
Geography? Largely Rajasthan, with some expansion dreams.
So it’s a commodity input + subsidy-linked biz, i.e., margins are forever under threat from weather, subsidy delays, and input costs.
3. 📈 Financials – Profit, Margins, Growth
| Year | Revenue (₹ Cr) | EBITDA (₹ Cr) | PAT (₹ Cr) | OPM % | ROCE | ROE |
|---|---|---|---|---|---|---|
| FY23 | 145 | 12 | 6 | 8% | 22% | 17% |
| FY24 | 152 | 12 | 6 | 8% | 19% | 14% |
| FY25 | 127 | 13 | 8 | 10% | 16% | 14% |
⚠️ Revenue fell in FY25 despite a 30% PAT jump → Margin expansion hiding volume/mix pressure?
💡 3-Year PAT CAGR: 35%
📉 But TTM sales: -17% YoY
Translation? They’re growing profits, but shrinking topline = not a great combo in a capital-intensive biz.
4. 💸 Valuation – Is It Cheap, Meh, or Crack?
| Metric | Value |
|---|---|
| CMP | ₹142 |
| Market Cap | ₹337 Cr |
| EPS (TTM) | ₹3.33 |
| P/E (TTM) | 42.5x |
| Book Value | ₹33.7 |
| P/B | 4.2x |
🎯 Fair Value Range (Based on 15x–25x PE on ₹3.3 EPS) = ₹50 – ₹83
So at ₹142, you’re paying startup-type multiples for a fertilizer stock that sells boron-boosted soil enhancers, not SaaS.
5. 🍿 What’s Cooking – IPOs, Dilution, Orders?
🚀 IPO in FY25: ₹41.6 Cr raised
🏭 Use of funds: Warehouses, capacity addition
📉 Promoter Holding:
- Dec ’23: 100%
- Mar ’25: 69.9%
- Dropped 30% in one quarter 🤯
📦 Order Book? Not disclosed.
📈 Volume growth? Murky.
🌧️ Monsoon dependency? High.
So it’s more of a “hope trade” on subsidy cycles, farmer demand, and a new warehouse saving the day.
6. 🧾 Balance Sheet – How Much Debt, How Many Dreams?
| Year | Borrowings | Equity | Reserves | Total Assets |
|---|---|---|---|---|
| FY21 | ₹20 Cr | ₹6 Cr | ₹15 Cr | ₹72 Cr |
| FY25 | ₹31 Cr | ₹24 Cr | ₹56 Cr | ₹124 Cr |
🧨 Debt up 50% in 5 years
🪙 Reserves increased post-IPO
📦 Assets are working capital heavy, not machinery-driven
So yeah, capital has gone into receivables and raw material — not massive production scale-up.
7. 💵 Cash Flow – Sab Number Game Hai
| Year | CFO (₹ Cr) |
|---|---|
| FY21 | +7 |
| FY23 | -4 |
| FY25 | -36 |
😵💫 FY25: ₹36 Cr cash burnt from operations
🥹 Despite ₹8 Cr net profit
Why?
- Debtor days: 129
- Inventory days: 173
- Payable days: 31
→ Cash conversion cycle: 271 days. That’s almost a full pregnancy.
8. 📊 Ratios – Sexy or Stressy?
| Ratio | Value |
|---|---|
| ROCE | 16.0% |
| ROE | 13.8% |
| OPM | 10% |
| P/E | 42.5x |
| Debtor Days | 129 |
| Inventory Days | 173 |
| CCC | 271 days |
| Promoter Holding | 69.9% ↓ |
✔️ ROE is solid — for now
⚠️ Debtor and inventory days = concerning
📛 Valuation is way ahead of fundamentals
9. 📈 Peer Comparison – Who Else in the Game?
| Company | Sales (₹ Cr) | PAT (₹ Cr) | ROE % | P/E | CMP (₹) |
|---|---|---|---|---|---|
| Coromandel Intl | 24,085 | 1,720 | 16.8 | 38x | ₹2,208 |
| Chambal Fert | 16,646 | 1,649 | 20.6 | 13x | ₹554 |
| Paradeep Phosph. | 13,820 | 552 | 14.4 | 23x | ₹161 |
| Balaji Phosphates | 127 | 8 | 13.8 | 42x | ₹142 |
🚩 Balaji trades at a premium to industry leaders, despite being 0.5% their size. That’s like a startup panipuri cart valued like Dominos.
10. 🧑🤝🧑 Shareholding Pattern
| Category | Mar ’25 |
|---|---|
| Promoters | 69.9% |
| FIIs | 3.55% |
| DIIs | 1.35% |
| Public | 25.2% |
| Shareholders | 583 |
✅ FII interest looks good
⚠️ Promoter dilution was a shocker — possibly to improve liquidity, but still…
11. 📢 Other Nuggets
- 📈 NPK and Zinc Fortified products give product mix diversity
- 🧾 IPO fund usage was largely compliant per July ’25 filings
- 🚜 The entire sector is subsidy-exposed and margin-sensitive
- 📉 Low dividend payout = zero returns unless price appreciates
12. 🧑⚖️ EduInvesting Verdict™
“A smallcap fertilizer stock with big dreams and bigger receivables.”
Balaji Phosphates shows clean accounting, margin expansion, and decent ROE…
…but it’s:
- Burning cash
- Valued way too high
- Losing promoter skin
Fair Value = ₹50–₹83
(15x–25x normalized ₹3.3 EPS)
Current price? Too spicy for fertilizer.
📦 Wait for debt to reduce, cash to flow, and monsoon to bless. Until then, let this phosphate settle before you spread it.
✍️ Written by Prashant | 📅 08 July 2025
Tags: Balaji Phosphates, SME IPO, Fertilizer Stocks, Phosphatic Fertilizer, NPK, Zinc Sulphate, Subsidy Sector, Working Capital Stocks, SME Overvalued, EduInvesting Analysis
