📌 At a Glance
Mangalore Chemicals & Fertilizers (MCF), once a sleepy urea and DAP seller under the Adventz Group, is now hitting headlines thanks to a potential merger with Paradeep Phosphates, rising institutional interest, and a 134% stock rally in one year.
But under the surface? Promoter pledging, slow revenue growth, and merger overhangs.
🧬 About the Company
- Parent: Zuari Fertilisers and Chemicals Ltd (Adventz Group)
- Sector: Fertilizers & Agrochemicals
- Core Products:
- Fertilizers: Urea, DAP, SSP
- Plant Nutrition: Micronutrients, soil conditioners
- Plant Protection: Insecticides, Fungicides, Herbicides
- Industrial Chemicals: Sulphuric Acid, Ammonium Bicarbonate
It’s your classic agri input play — supplying everything from nitrogen to neem-coated hope.
🧾 5-Year Financial Summary (FY21–FY25)
| Metric | FY21 | FY22 | FY23 | FY24 | FY25 |
|---|---|---|---|---|---|
| Revenue (₹ Cr) | 2,144 | 2,896 | 3,642 | 3,795 | 3,332 |
| Net Profit (₹ Cr) | 67 | 88 | 135 | 155 | 144 |
| EBITDA (₹ Cr) | 208 | 216 | 315 | 382 | 322 |
| EBITDA Margin (%) | 10% | 7% | 9% | 10% | 10% |
| EPS (₹) | 5.66 | 7.41 | 11.36 | 13.06 | 12.13 |
| ROE (%) | 10% | 11% | 14% | 17% | 14% |
➡️ EduNote: EPS doubled in 3 years. But revenue is falling again (FY25), hinting at subsidy issues or falling volumes.
🪓 Compounded Growth (as per Screener)
| Metric | 3-Y CAGR | 5-Y CAGR | TTM |
|---|---|---|---|
| Sales | 5% | 4% | -12% |
| Profit | 16% | 16% | -9% |
| Stock Price | 37% | 49% | 134% |
Yes, stock price grew faster than profits, again. Classic smallcap rerating vibes.
💣 Merger Alert: MCF + Paradeep Phosphates
- Status: NCLT has scheduled creditors meeting on June 16, 2025
- Merged Entity = Scale + Synergies:
- Both under Adventz Group
- Combined will have one of India’s largest phosphate + nitrogen fertilizer footprints
- Concerns:
- Valuation swap ratio not disclosed
- Integration risk in capex-heavy fertilizer businesses
🧠 Verdict: The merger could be a game-changer — or a fertilizer version of Jet Airways + Air Sahara.
📊 Quarterly Performance – FY25 (Standalone)
| Quarter | Revenue (₹ Cr) | Net Profit (₹ Cr) | EPS (₹) |
|---|---|---|---|
| Q1 | ₹814 | ₹44 | ₹3.71 |
| Q2 | ₹776 | ₹26 | ₹2.23 |
| Q3 | ₹968 | ₹57 | ₹4.84 |
| Q4 | ₹774 | ₹16 | ₹1.35 |
⚠️ Margins fluctuate heavily. Volatile due to global ammonia prices + subsidy receipt delays.
📉 Shareholding Snapshot (FY25)
| Shareholder | FY22 | FY25 |
|---|---|---|
| Promoters | 60.63% | 60.63% (constant) |
| Pledged Holding | 46.4% | Still high ⚠️ |
| FII Holding | 0.13% ➝ 2.12% ✅ | |
| DII Holding | 0.19% ➝ 6.71% ✅ | |
| Public | 38.17% ➝ 29.66% ❌ |
👀 DIIs are buying. Public is selling. Promoters haven’t reduced pledging. Mixed signals.
💼 Balance Sheet Walk
| Year | Net Worth (₹ Cr) | Borrowings (₹ Cr) | Total Assets (₹ Cr) |
|---|---|---|---|
| FY21 | 608 | 884 | 1,997 |
| FY25 | 1,065 | 741 | 2,333 |
✅ Debt reduction of ₹336 Cr in 4 years
✅ Reserves nearly doubled
🔻 Capex minimal — fixed assets have plateaued
🪙 Cash Flow Snapshot
| Year | CFO (₹ Cr) | FCF | Remarks |
|---|---|---|---|
| FY24 | ₹496 Cr | ✅ | Solid working capital release |
| FY25 | ₹271 Cr | ✅ | Still positive despite subsidy delays |
| Capex | Minimal | Focused on maintaining ops, not expansion |
📊 Peer Comparison (as of June 2025)
| Company | P/E | Market Cap (₹ Cr) | ROCE (%) | EPS (TTM) |
|---|---|---|---|---|
| Coromandel | 39 | ₹70,196 | 24.1 | ₹60+ |
| Chambal Fert | 13.7 | ₹22,632 | 27.9 | ₹41+ |
| Paradeep Phos | 25.8 | ₹14,276 | 13.9 | ₹6–8 |
| Mangalore Chem | 22.8 | ₹3,272 | 14.9 | ₹12.13 |
➡️ Valuation: Slightly expensive vs Paradeep, but cheaper than Coromandel.
⚠️ Integration with Paradeep may cause re-rating — or de-rating — depending on synergy.
🧮 Forward Fair Value Estimate (Post-Merger Guesswork)
- Standalone EPS FY26E: ₹13–14
- Reasonable P/E (Agro sector): 18–22
- Fair Value Range: ₹235–₹310
- CMP: ₹276
⚠️ If merger approved and synergy visible, 20–30% upside likely. If delayed or EPS gets diluted? Risk of 15–20% downside.
🧠 EduInvesting Take
“MCF is what happens when a solid operator gets a flashy narrative: merger.”
The stock ran 134% in 1 year — more than its last 3 years’ EPS growth combined. Now it’s entering a volatile phase. On its own, MCF is steady. As a merged entity? High-risk, high-stakes fertilizer play.
This could become a core agri midcap — or just another merger that looked good only on the investor deck.
Author: Prashant Marathe
Date: 12 June 2025
Tags: Mangalore Chemicals, Paradeep Phosphates, Fertilizer Stocks, Zuari Group, Agrochemicals, Merger NCLT, EduInvesting Recap, Smallcap Stocks India
