The share prices of these two fertilizer companies remained in focus after Competition Commission of India approved a proposed merger and arrangement between them.
Share price movements:
With a market capitalization of Rs 7,520.41 crores the shares of Paradeep Phosphates Limited (PPL) closed at Rs 92.30 on Wednesday. With a market capitalization of Rs 1,623.66, the shares of Mangalore Chemicals and Fertilizers Limited (MCFL) closed at Rs 137 a piece on the same day.
Paradeep Phosphates Limited has generated a return of 42 percent over the past year and Mangalore Chemicals and Fertilisers Limited has generated a return of 32 percent for the same period.
What happened:
According to the stock exchange filings published by both Paradeep Phosphates Limited and Mangalore Chemicals & Fertilizers Limited, the companies have mentioned that the Competition Commission of India (CCI) has approved a proposed merger and arrangement between Paradeep Phosphate Limited and Mangalore Chemicals & Fertilizers Limited.
Why it Matters:
By merging Mangalore Chemicals & Fertilizers Limited with Paradeep Phosphates Limited, the new company is expected to benefit from economies of scale, use resources more efficiently, and become more competitive in the market.
The merger will help the two fertilizer companies combine their operations, increasing their total production capacity to 3.6 million tons per year. The new company will be named PPL.
Financials:
The revenues of Mangalore Chemicals & Fertilizers Limited grew by 3.5 percent from Rs 786 crores in Q4FY24 to Rs 814 crores in Q1FY25. Also for the same period the net profits of the firm grew by 780 percent from Rs 5 crores to Rs 44 crores.
The revenues of Paradeep Phosphates Limited fell by 13.5 percent from Rs 2,595 in Q3FY24 to Rs 2,243 crores in Q4FY24. Also for the same period, the net profits fell drastically by 79 percent from Rs 109 crores to Rs 22 crores.
Ratios:
As of March 2024 the ROE and ROCE of Paradeep Phosphates Limited stood at 2.78 percent and 11.41 percent respectively. The trailing 12 months’ ROCE and ROE of Mangalore Chemicals and Fertilizers Limited stood at 18 percent and 17 percent respectively.
Mangalore Chemicals & Fertilizers Ltd’s EBITDA :
The EBITDA of Mangalore Chemicals & Fertilizers Ltd rose by 22.6 percent from Rs 340 crores in FY23 to Rs 417 crores In FY24.
Paradeep Phosphates Limited product launch:
PPL is introducing India’s first biogenic Nano Urea and Nano DAP under the “Jai Kisaan Navratna” brand. The Nano-Urea has 8% nitrogen, while the Nano-DAP contains 6% nitrogen and 16% phosphorus. They are named Jai Kisaan Navratna Nano Shakti Urea and Jai Kisaan Navratna Nano Shakti DAP.
About the Company:
Incorporated in 1981, Paradeep Phosphates Limited is a manufacturer of non-urea fertilizers and India’s second-largest private-sector phosphatic company.
Mangalore Chemicals and Fertilizers Limited (MCF) is primarily engaged in the manufacture, purchase, and sale of fertilizers. It is a subsidiary of Zuari Fertilisers and Chemicals Limited, an Adventz Group.
Written By Zahal
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