In the financial domain, Paradeep Phosphates demonstrated a very positive performance during the quarter, with net sales reaching a peak of ₹6,872.20 crore. The company’s profit before depreciation, interest, and taxes (PBDIT) also attained its highest quarterly figure at ₹656.64 crore, while profit before tax excluding other income stood at ₹426.82 crore. Net profit after tax was recorded at ₹341.94 crore, accompanied by an earnings per share (EPS) of ₹4.19. These figures underscore a robust operational quarter, although the interest expense also rose to ₹140.25 crore, marking the highest level in recent periods.
Return on capital employed (ROCE) for the half-year period was reported at 14.70%, indicating efficient utilisation of capital resources. Despite the strong financial results, the company’s financial score saw a decline from 35 to 23 over the past three months, reflecting nuanced shifts in underlying metrics. This adjustment in evaluation aligns with the broader financial trend moving from positive to very positive, signalling a complex but generally favourable financial landscape for Paradeep Phosphates.
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Turning to quality metrics, Paradeep Phosphates’ evaluation shifted from average to good, supported by several key indicators. The company’s five-year sales growth rate stands at 24.19%, while EBIT growth over the same period is recorded at 46.41%. The average EBIT to interest coverage ratio is 2.51, suggesting the company’s earnings sufficiently cover interest obligations. Debt to EBITDA ratio averages 6.45, and net debt to equity ratio is 0.96, reflecting moderate leverage levels.
Additional quality parameters include a sales to capital employed ratio of 1.43 and a tax ratio of 26.82%. The dividend payout ratio is 40.78%, indicating a balanced approach to shareholder returns. Promoter shareholding remains significant at 57.2%, with pledged shares at 13.92% and institutional holding at 29.58%. Return on equity (ROE) averages 9.65%, while ROCE averages 9.05%, both indicative of steady profitability and capital efficiency. When compared with peers in the fertiliser sector, Paradeep Phosphates ranks favourably, joining companies like Chambal Fertilisers and Deepak Fertilisers in the good quality category.
From a valuation perspective, Paradeep Phosphates is trading at a discount relative to its peers’ historical averages. The company’s ROCE of approximately 15% and an enterprise value to capital employed ratio of 1.6 suggest an attractive valuation framework. Over the past year, the stock has generated a return of 52.91%, significantly outperforming the Sensex return of 9.48% for the same period. Profit growth over the year has been substantial, with profits rising by nearly 150%, resulting in a price-to-earnings-to-growth (PEG) ratio of 0.1, which may indicate undervaluation relative to earnings growth.
Market performance data further illustrates Paradeep Phosphates’ relative strength. Year-to-date returns stand at 45.88%, compared to the Sensex’s 8.36%. Over three years, the stock has delivered a cumulative return of 187.99%, far exceeding the Sensex’s 37.31%. These figures highlight the company’s capacity to generate market-beating returns over multiple time horizons, despite some short-term volatility such as a 9.07% decline over the past month.
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Technical indicators for Paradeep Phosphates reveal a shift from a mildly bullish trend to a sideways pattern. The Moving Average Convergence Divergence (MACD) on weekly and monthly charts is mildly bearish, while the Relative Strength Index (RSI) shows no clear signal on both timeframes. Bollinger Bands indicate bearishness on the weekly chart but mildly bullish conditions monthly. Daily moving averages suggest a mildly bullish stance, whereas the KST indicator on the weekly chart is mildly bearish. Dow Theory analysis shows no trend weekly and mild bearishness monthly. On-balance volume (OBV) is mildly bullish weekly but shows no trend monthly. These mixed signals contribute to a more cautious technical evaluation of the stock’s near-term momentum.
Promoter confidence appears to be strengthening, with promoters increasing their stake by 1.16% over the previous quarter. Currently holding 57.2% of the company, this rise in promoter shareholding may reflect a positive outlook on the company’s future prospects. The stock’s 52-week trading range spans from ₹83.35 to ₹234.05, with the current price at ₹161.85, indicating a position closer to the mid-range of its annual price movement.
Overall, Paradeep Phosphates exhibits a complex profile with strong financial results, improving quality metrics, attractive valuation parameters, and mixed technical signals. The adjustment in evaluation reflects these multifaceted developments, providing investors with a nuanced perspective on the company’s current standing within the fertiliser sector.
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