According to a report by CRISIL, domestic sales of complex fertilizers, such as diammonium phosphate (DAP) and NPK (nitrogen, phosphorus, and potassium), are projected to grow by 4-5% in fiscal 2025.
The growth is expected due to anticipated normal monsoon conditions and stable retail prices. Despite experiencing a robust growth of 7-8% in fiscal year 2024, complex fertilizer manufacturers are forecasted to witness a decline in operating profitability by 30-35% in the current fiscal year.
The report suggests that the decrease in operating profitability is due to various factors, including lower volatility in raw material costs, which will enable the government to offer a commensurate nutrient-based subsidy (NBS) to manufacturers.
The subsidy aims to improve the operating profitability of manufacturers to a normalized level of about ₹4,000-₹4,500 per ton in the next fiscal year following a decline in the current fiscal.
The growth observed in the current fiscal year is attributed to improved availability and record pre-buying by farmers in the first half, anticipating retail price hikes in the second half. Despite the projected decline in profitability for the current fiscal year, a rebound is expected in the next fiscal year, supported by expectations of adequate NBS rates and a normal monsoon.
CRISIL underscores the positive medium-term growth outlook for complex fertilizers, emphasizing the importance of balanced soil nutrition for enhanced productivity and yields, along with the availability of subsidized rates.
As reported by India Brand Equity Foundation, the report highlights the typical dependency of profitability for complex fertilizer makers on factors such as raw material input prices, NBS rates, and retail sales prices, with expectations of normalization in profitability to ₹4,000-₹4,500) per ton in the next fiscal year.
