Rose 2% on-year in fiscal 2023, with the government compensating higher input costs through increased subsidy payouts
Growth outlook remains relatively flat this fiscal amid evolving threat of El Niño
Supply
20% of urea requirement will need to be imported despite ~8 million tonne of capacities commissioned between fiscals 2017 and 2023
35-40% of non-urea requirement also to be imported, with continued high import dependence on key raw materials
Nano technology could replace imports - its efficacy and pace of adoption will be critical
Profitability
Urea, while immune to volatility in natural gas prices in the recent past, will see range-bound margins owing to tighter energy norms and under-recovery of fixed costs
Adequate Nutrient-Based Subsidy (NBS) and easing global prices will ensure profit of the non-urea segment at comfortable levels
Subsidy receivables
Requirements may surpass the budget allocation of Rs 1.75 lakh crore this fiscal, given allocations for the kharif season
Additional budgetary allocation is likely this fiscal, in line with past trend of timely governmental support
Credit profile
Timely subsidy payouts and no major capital expenditure (capex) plans will keep credit profiles of players comfortable
Analytica