Fertilizers & Chemicals Travancore Ltd Reports Sharp Quarterly Decline Amid Rising Sales

Quarterly Revenue Growth Contrasts with Earnings Collapse

In the December 2025 quarter, F A C T posted net sales of ₹1,567.84 crores, marking a robust 34.2% increase compared to the average of the previous four quarters. This top-line growth is a positive indicator amid a challenging fertiliser sector, suggesting sustained demand or improved pricing power. However, this encouraging revenue expansion starkly contrasts with the company’s profitability metrics, which have taken a severe hit.

Profit after tax (PAT) plunged to a loss of ₹67.90 crores, representing a staggering decline of 399.4% relative to the prior four-quarter average. This sharp reversal into negative territory signals significant cost pressures or one-off impairments that have eroded earnings. The operating environment appears increasingly difficult, with the company struggling to convert sales growth into bottom-line gains.

Margins Under Pressure: Operating Profit and PBDIT Slide

Operating profit margins have contracted sharply, with the operating profit to net sales ratio falling to -2.73% for the quarter, the lowest level recorded in recent periods. Correspondingly, profit before depreciation, interest, and taxes (PBDIT) declined to a negative ₹42.88 crores, underscoring operational inefficiencies or elevated input costs. The company’s profit before tax less other income (PBT less OI) also deteriorated to a loss of ₹113.27 crores, highlighting the absence of offsetting income streams.

These margin contractions are particularly concerning given the sector’s cyclical nature and the company’s historical performance, which had been relatively stable before this downturn. The negative financial trend score of -10, down from 3 three months ago, reflects this worsening profitability landscape.

Balance Sheet and Liquidity Challenges

F A C T’s financial health is further strained by a rising debt burden and weakening liquidity. The company’s debt-to-equity ratio at the half-year mark has surged to 2.79 times, the highest in recent history, signalling increased leverage and potential refinancing risks. This elevated gearing is compounded by a low operating profit to interest coverage ratio of -0.69 times, indicating that earnings are insufficient to cover interest expenses, a red flag for creditors and investors alike.

Cash and cash equivalents have dwindled to ₹2,222.42 crores at half-year, the lowest level recorded, raising concerns about the company’s ability to meet short-term obligations. Additionally, the debtors turnover ratio has fallen to 8.33 times, suggesting slower collection cycles and potential working capital inefficiencies.

Stock Performance and Market Context

Despite the negative earnings trajectory, F A C T’s stock price has shown some resilience, closing at ₹818.55 on 29 Jan 2026, up 3.57% from the previous close of ₹790.30. The intraday range saw a low of ₹777.80 and a high of ₹828.00. However, the stock remains well below its 52-week high of ₹1,111.00 and above its 52-week low of ₹565.20, reflecting volatility amid mixed investor sentiment.

When compared to the broader market, F A C T’s returns have been uneven. Year-to-date, the stock has declined by 10.31%, underperforming the Sensex’s modest 3.37% fall. Over the past year, the stock has lost 6.06%, while the Sensex gained 8.49%. Yet, the company’s longer-term performance remains impressive, with a three-year return of 175.70% versus the Sensex’s 38.79%, and a remarkable ten-year return of 3,835.34% compared to the Sensex’s 236.52%. This disparity highlights the stock’s historical growth potential but also recent headwinds.

Mojo Score and Analyst Ratings

Reflecting the deteriorating fundamentals, MarketsMOJO has downgraded F A C T’s Mojo Grade from Sell to Strong Sell as of 22 Dec 2025. The current Mojo Score stands at 21.0, signalling significant caution for investors. The company’s market cap grade remains low at 2, indicating limited market capitalisation strength relative to peers in the fertiliser sector.

These ratings underscore the risks associated with the company’s elevated debt levels, negative profitability, and weakening operational metrics. Investors are advised to weigh these factors carefully against the company’s historical growth and sector outlook.

Sectoral and Industry Considerations

The fertiliser industry continues to face challenges including fluctuating raw material costs, regulatory changes, and variable demand linked to agricultural cycles. F A C T’s recent financial performance may be symptomatic of broader sectoral pressures, but its sharper margin contractions and liquidity strains suggest company-specific issues as well.

Given the sector’s importance to India’s agricultural economy, companies with stronger balance sheets and more stable earnings profiles may offer safer investment avenues. F A C T’s current financial trajectory raises questions about its ability to sustain growth and profitability in this environment.

Outlook and Investor Considerations

Looking ahead, F A C T faces a challenging path to recovery. The company must address its high leverage and restore operational efficiencies to return to profitability. Investors should monitor upcoming quarterly results closely for signs of margin stabilisation or further deterioration.

While the company’s strong historical returns demonstrate its potential, the current negative financial trend and weak liquidity metrics warrant a cautious stance. Market participants may prefer to consider alternative fertiliser stocks or sectors with more favourable fundamentals and lower financial risk.

In summary, Fertilizers & Chemicals Travancore Ltd’s recent quarterly results reveal a troubling shift in financial health, with revenue growth overshadowed by steep losses and margin contraction. The downgrade to a Strong Sell rating by MarketsMOJO reflects these concerns, signalling that investors should exercise prudence when evaluating this stock in their portfolios.

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