Rama Phosphates Q1 FY26 Results (NSE: RAMAPHO)
Signal: Margin pressure
The read
Q1FY26 revenue of ₹224.80 Cr (+18.1% YoY) was driven by strong fertilizer segment demand, but gross margin compressed ~275bps to 76.23% due to input cost inflation that was not fully passed through. Operating profit grew 6.3% YoY, while PAT grew 6.4% YoY, aided by a lower tax rate. The company is executing major capacity expansions: Dhule greenfield SSP/Sulphuric Acid plant near completion (trial production by Sep'26) and Udaipur SSP capacity expansion to 3,15,000 MTPA. The sequential recovery from Q4FY26's weak operating margin (3.1% to 10.15%) is encouraging but gross margin headwind persists.
| Metric | Value | YoY | QoQ |
|---|---|---|---|
| Revenue | ₹224.8 Cr | 18.1% | 2.61% |
| EBIT | ₹22.81 Cr | 6.29% | |
| Net profit | ₹17.06 Cr | 6.43% | |
| EPS | ₹4.82 | 6.4% | |
| EBIT margin | 10.15% |
P&L walk
Revenue grew 18.1% YoY driven by strong fertilizer segment (+25.4%), but gross margin compressed ~275bps to 76.23% due to higher raw material costs; EBITDA margin expanded ~570bps QoQ from sequential recovery in operating profit (Q4FY26 was weak at 3.1% margin). Finance cost was flat YoY; tax rate dropped sharply from 25.3% to 25.2% (vs 33.1% in prior-year Q1) boosting PAT growth; PAT of ₹17.06 Cr (+6.4% YoY) was in line with operating profit growth.
Segments
Fertilizer segment is the engine: revenue +25.4% YoY to ₹22,122.71 lakh and segment PBIT of ₹2,867.46 lakh (12.96% margin) drove overall performance; Soya/Agri revenue collapsed 74.4% YoY to ₹356.88 lakh and swung to a small loss of ₹28.18 lakh (vs loss of ₹27.85 lakh in Q1FY25), but its impact is marginal (<2% of total revenue).
Key positives
- Fertilizer segment revenue grew 25.4% YoY to ₹22,122.71 lakh, indicating strong demand and market share.
- Employee cost grew only 6.9% YoY vs revenue +18.1%, providing operating leverage; employee cost as % of revenue dropped 63bps to 4.22%.
- Depreciation fell 8.3% YoY even as segment assets expanded 20% YoY, suggesting capacity not yet fully capitalised/depreciated.
- Tax rate normalised to 25.2% from 33.1% in Q1FY25, adding ~₹136 lakh to net profit vs year-ago tax level.
- Capex pipeline: Dhule greenfield project at final stage (trial by Sep'26) and Udaipur expansion to 3,15,000 MTPA will boost capacity.
Key concerns
- Gross margin compressed ~275bps YoY to 76.23% as raw material cost growth (₹17,135.55 lakh, +32.5% YoY) outpaced revenue growth (18.1%), indicating input price inflation was not fully passed through.
- Soya/Agri segment revenue collapsed 74.4% YoY to ₹356.88 lakh and swung to a small PBIT loss; this segment is negligible but adds volatility.
- Finance cost jumped 111% QoQ to ₹405.23 lakh, likely reflecting working capital buildup; interest coverage remains comfortable at ~5.6x.
- EBIT margin contracted 152bps YoY to 10.15% due to gross margin pressure, despite operating leverage elsewhere.
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