At a Glance
Chambal Fertilisers & Chemicals Ltd (CHAMBLFERT) dropped its Q1 FY26 results like a bag of urea—stinky for the environment, but sweet for investors. Revenue clocked ₹5,865.9 crore (+15.5% YoY), with net profit ₹637.9 crore (+22.4% YoY) and EPS ₹13.7. The company continues to flaunt its debt-free status and a 26% dividend payout like a badge of honour. At ₹515 per share and a P/E of just 11.8, this urea unicorn looks oddly underpriced—unless the market knows something we don’t.
Introduction
Meet Chambal Fertilisers: India’s urea powerhouse and the farmer’s frenemy. The company produces urea at its Kota plants, markets other fertilizers (DAP, MOP, NPK), and even has a Moroccan side hustle manufacturing phosphoric acid. This isn’t your average agri-player—it’s a blend of old-school urea business with a sprinkle of global partnerships.
However, while profits are solid, sales growth over five years is just 6%—slower than government subsidy approvals. The stock has fallen 30% from its 52-week high, making investors wonder: value trap or golden bagger?
Business Model (WTF Do They Even Do?)
Chambal’s business is straightforward:
- Urea Manufacturing – core revenue driver, heavily subsidized by the government.
- Trading in Fertilisers – sells DAP, MOP, and other crop nutrients.
- Moroccan JV – manufactures phosphoric acid, because why not diversify where the phosphates are?
The model is subsidy-driven; margins are controlled by policy, not pricing power. Yet, efficient operations and cost control allow it to churn solid profits.
Financials Overview
Q1 FY26 Highlights (₹ Cr):
- Revenue: 5,865.9 (+15.5% YoY)
- EBITDA: 761 (+16% YoY)
- PAT: 637.9 (+22.4% YoY)
- EPS: ₹13.7
Annualized EPS = ₹13.7 × 4 = ₹54.8
Fresh P/E = ₹515 / ₹54.8 ≈ 9.4 (cheap compared to sector median 26).
Margins improved to 13% OPM, ROCE at 28%, and ROE at 20.6%—making it one of the most efficient fertiliser players.
Valuation
Fair Value using three lenses:
- P/E Method: Assume sector P/E 15 × EPS ₹54.8 = ₹822
- EV/EBITDA: EBITDA FY26 est. ₹3,200 Cr, apply 8× multiple → EV ₹25,600 Cr → FV ₹640/share
- DCF: FCF est. ₹1,800 Cr growing 5% for 5 years, discount 12% → FV ≈ ₹700
Fair Value Range: ₹640–₹820
Current price ₹515 offers a 20–40% upside if the market stops sulking.
What’s Cooking – News, Triggers, Drama
- Falling Natural Gas Prices → potential margin booster.
- Government Subsidy Timelines → always a wild card.
- Morocco JV → stability in phosphoric acid supply chain.
- Dividend King → continues 26% payout, attracting yield hunters.
Balance Sheet
| (₹ Cr) | Mar 2025 |
|---|---|
| Assets | 11,407 |
| Liabilities | 2,580 |
| Net Worth | 8,728 |
| Borrowings | 99 |
Auditor Punchline: “Debt? Almost zero. Cash flow? Healthy. Chambal’s balance sheet is cleaner than most politicians’ tax returns.”
Cash Flow – Sab Number Game Hai
| (₹ Cr) | Mar 2023 | Mar 2024 | Mar 2025 |
|---|---|---|---|
| Ops | 3,239 | 3,327 | 1,394 |
| Investing | -1,872 | -382 | 739 |
| Financing | -1,862 | -2,871 | -2,135 |
Commentary: Strong operating cash but heavy dividend payouts and capex keep financing outflows high.
Ratios – Sexy or Stressy?
| Metric | Value |
|---|---|
| ROE | 20.6% |
| ROCE | 27.9% |
| P/E | 9.4 (fresh) |
| PAT Margin | 12% |
| D/E | 0.0 |
Verdict: “Sexy as far as fertilizers go—this is the Hritik Roshan of urea.”
P&L Breakdown – Show Me the Money
| (₹ Cr) | Mar 2023 | Mar 2024 | Mar 2025 |
|---|---|---|---|
| Revenue | 27,773 | 17,966 | 16,646 |
| EBITDA | 1,822 | 2,047 | 2,483 |
| PAT | 1,034 | 1,276 | 1,649 |
Commentary: FY24–25 saw revenue dip due to global price corrections, but profits grew thanks to cost control.
Peer Comparison
| Company | Rev (₹ Cr) | PAT (₹ Cr) | P/E |
|---|---|---|---|
| Coromandel Int. | 26,399 | 1,973 | 40 |
| FACT | 4,051 | 22 | 2726 |
| Paradeep Phosp. | 15,197 | 802 | 22 |
| Chambal | 17,411 | 1,750 | 9.4 |
Roast: “While peers are trading at Hollywood multiples, Chambal is available at a Bollywood discount.”
Miscellaneous – Shareholding, Promoters
- Promoter Holding: 60.5% (stable)
- FII Holding: 17.1% (bullish)
- DII Holding: 6.6%
- Public Holding: 15.8%
Promoters are steady, FIIs increasing stakes—always a green flag.
EduInvesting Verdict™
Chambal Fertilisers is the poster child of efficiency in a regulated sector. With a debt-free balance sheet, strong ROE/ROCE, and cheap valuation, it screams “undervalued.” The only downside? Low sales growth and policy dependence. But as long as India keeps eating (and farmers keep farming), urea demand isn’t going anywhere.
SWOT:
- Strength: Cost efficiency, high returns, debt-free.
- Weakness: Sales growth stagnation, subsidy delays.
- Opportunity: Expansion, phosphoric acid JV scaling, dividend reinvestment.
- Threat: Policy risk, global fertilizer price swings.
Final Thought:
At ₹515, Chambal is the kind of stock where fundamentals say BUY, but Mr. Market is having a mood swing. For long-term investors, this might just be the cheapest ticket to a dividend-paying compounder.
Written by EduInvesting Team | 31 July 2025
SEO Tags: Chambal Fertilisers, Urea, Stock Analysis, Q1 FY26, Agrochemicals
