Accumulate Paradeep Phosphates, Target Rs 141: Prabhudas Lilladher

Paradeep Phosphates Sees Revenue Growth, Expands Capacity

Paradeep Phosphates (PPL) has reported a consolidated revenue of Rs47 billion in Q4FY26, marking a 12% year-over-year (YoY) increase. However, the company witnessed a 10% YoY decrease in sales volumes. Notably, PPL's gross margins expanded by 480 basis points, thanks to strategic raw material sourcing and effective inventory management.

Key Highlights

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The company's management has indicated that inventory levels remain adequate for Q1FY27, despite potential sourcing challenges due to prolonged disruptions. PPL's existing capacities operated at full utilization during FY26, and the company is undertaking a 1 million metric ton per annum (mmtpa) granulation capacity expansion and debottlenecking initiatives at its Paradeep plant. These expansion plans are expected to drive volume growth from H2FY27 onwards.

In terms of capital expenditures, PPL has increased its sulphuric acid capacity to 2mmtpa from 1.4mmtpa in FY26. The company is also on track to double its phosphoric acid capacity to 1mmtpa by early FY29, enabling full backward integration upon completion.

Outlook and Valuation

While elevated raw material prices may exert near-term margin pressure, Prabhudas Lilladher believes that PPL's integrated operations and scale expansion will support sustained earnings growth over the medium term. At the current market price (CMP), PPL trades at approximately 10x FY28E earnings per share (EPS). The research firm values the company at 11x FY28E EPS, with a target price of Rs141 and maintains an 'Accumulate' rating.

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