Madras Fertilizers Limited

Basic Materials — Agricultural Inputs · NSE

₹59.00+₹0.40 (+0.68%)

DalalBaazaar Score

54 / 100

🟡 Moderate

Verdict

CAUTION

Risk

Very High

Driven by high debt relative to equity, short-term liabilities exceed short-term assets, negative free cash flow.

In simple words: Strong business and financial position, though profits are falling even as sales grow. Debt is the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 7:46 pm

Understanding the Business

Company site ↗

The 60-second version of Madras Fertilizers Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

Madras Fertilizers Limited manufactures and trades fertilizers in India. The company offers ammonia, urea, and complex fertilizers; bio-fertilizers; and organic fertilizers under the brand name VIJAY.

IndustryAgricultural Inputs

SectorBasic Materials

Employees350

Annual revenue₹390 Cr

How does it make money?

Turns over ₹390 Cr a year. Of every ₹100 of sales, about ₹21 reaches shareholders as profit, with ₹47 left at the operating level before interest, tax and depreciation. Each of its 350 employees supports ₹1.12 Cr of revenue a year, the signature of a capital- or asset-led business.

Revenue / employee₹1.12 Cr

Who are its competitors?

The closest listed comparisons in its industry are TATA STEEL LIMITED, JSW STEEL LIMITED, ULTRATECH CEMENT LIMITED, ASIAN PAINTS LIMITED. These are the companies its valuation and returns are measured against elsewhere in this report.

Compared side by side in Peers ↓

What is its competitive advantage?Some evidence

ROCE of 67.8% is above what capital typically costs, which suggests some pricing power, though not yet the sustained, wide gap that marks a durable advantage.

Peer median ROE22.3%

What has been driving growth?

Profit has moved mainly because margins changed, not because the business sold much more. Over 3 years revenue moved +27% while net margin moved -66% relative to itself. What this cannot tell you is which products, customers or geographies did the work — that lives in the segment disclosures of the annual report.

Revenue effect+27%

Margin effect-66%

DalalBaazaar Score

54/ 100

Moderate

Weighted across six categories. Every point is explained below.

✓ Beta of 0.28 — historically steadier than the index
✗ Micro Cap: thinner liquidity and sharper drawdowns are normal
✗ High leverage magnifies any downturn in earnings
✗ Profits have swung sharply from year to year — earnings are hard to forecast
✗ Negative free cash flow means dependence on external funding

Quality vs. Valuation

Company Quality

54/ 100

Average

How good the business is, ignoring the share price entirely.

Valuation

82/ 100

Cheap

What you are being asked to pay, ignoring how good the business is.

A reasonable business at a reasonable price — neither the quality nor the valuation stands out in either direction.

Historical Valuation

Current P/E

13.4x

3Y Median

16.9x

40 monthly readings · mean 87.7x · range 6.5x–314.5x

Sector Median

28.7x

median of 4 sector peers

🟢Current valuation is approximately 21% below its 3y median of 16.9x. Cheaper than its own history, which is worth a reason too: the market may be pricing in something the backward-looking numbers do not show.

🟢Against its sector it trades 53% below the peer median of 28.7x.

vs. its own history

Cheap

16.9x median over 40 months · -21%

vs. sector peers

Cheap

28.7x median of 4 peers · -53%

vs. generic bands

Cheap

Below 15x

EV/EBITDA

7.9x

PEG

—

What's Good / What's Bad

🟢 What's Going Well3

Debt is being paid down
Total debt is down 58% over 3 years.
High return on capital employed
ROCE of 67.8% is the mark of a business that converts capital into profit efficiently.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention0

Nothing stands out as clearly deteriorating on the years of data available.

Red Flags

6 items require attention · 3 high · 3 watch

🔴High leverageFinancial
Debt/Equity of 6.90x — earnings must service borrowings before shareholders see anything.
🔴Profit up while operating cash flow fallsFinancial
Reported profit rose but cash generated by operations declined — worth checking whether earnings are being supported by non-cash items or working capital.
🔴Significant margin compressionFinancial
EBITDA margin has fallen 62.1 points, from 109.0% to 46.9%.
🟡Free cash flow is negativeFinancial
Free cash flow was -₹26 Cr in the latest year.
🟡Profit is decliningFinancial
Net profit is down 57% over 3 years.
🟡Short-term liquidity is tightFinancial
Current ratio of 0.71 — near-term obligations exceed near-term assets.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Capital compounds at a high rate
ROCE of 67.8% means each rupee reinvested earns well above what capital costs. If the company can keep deploying at this rate, growth creates value rather than just consuming cash.
Deleveraging frees up earnings
Debt is down 58% over 3 years. Every rupee of interest not paid drops to the bottom line, so profit can grow even if revenue does not.
Priced below its own history
The stock trades 21% below its own median multiple. If the business performs as it has and simply re-rates back to normal, that gap is return on its own.
Cheaper than its peers
It trades 53% below the sector median. Either the market sees a problem the numbers do not show, or the discount closes.
Earnings have proved durable
Profitable in every one of the last 4 reported years. Consistency lowers the risk that any single bad year is structural rather than cyclical.

🔴 Bear CaseWhat could go wrong?

Margins are being competed away
EBITDA margin has fallen from 109.0% to 46.9%. If the trend continues, profit falls even on flat sales — and margin decline rarely reverses quickly.
The debt load needs earnings to hold up
Debt is 3.5x EBITDA. At that level a downturn in earnings turns a manageable balance sheet into a refinancing problem, and lenders get paid before shareholders.
Earnings are hard to forecast
Profit has swung sharply from year to year, so any single year — good or bad — is a weak guide to the next. Cyclical earnings deserve lower multiples for that reason.
Size brings its own risk
Micro Cap businesses are thinly traded, so exits are harder in a falling market and single events move the price more than they would for a larger company.
Several serious flags at once
3 high-severity checks triggered. Individually each has an explanation; together they raise the chance that something structural is wrong rather than a one-off.

🟡 Key Things to WatchMeasurable tripwires, set against where this company stands today

1EBITDA margin holds above 45%✓ 46.9%
Two points below today's level — enough room for noise, tight enough to catch real compression.
2Debt / EBITDA falls below 3x✗ 3.5x
Already stretched, so this is a reduction target rather than a level to hold. Around 3x is where lenders typically start attaching conditions.
3Free cash flow remains positive✗ -₹26 Cr
Profit that never becomes cash eventually stops being profit.
4Interest cover stays above 3x✗ 2.7x
How much operating profit can fall before interest stops being comfortably covered.
5Revenue growth stays above 6% a year✓ 8.2% CAGR
Latest reported year was 21.1%. The bar is set below the established compounding rate, so ordinary variation does not trip it.

Investment Checklist

5 / 11 checks passed

✓ Strong return on equity (ROE ≥ 15%)
✓ Strong return on capital employed (ROCE ≥ 15%)
✗ Healthy net margin (≥ 10%)
✗ Generates positive free cash flow
✗ Manageable leverage (Debt/Equity < 1.0)
✗ Adequate short-term liquidity (Current Ratio ≥ 1.0)
✓ Revenue growing year-over-year
✗ Profit growing year-over-year
✓ Not trading at an extreme valuation (P/E < 40x)
✓ Not buying right at the 52-week high
✗ Short-term technical trend isn't bearish

Price history

Quick Metrics

5 good · 2 neutral · 4 weak

Market Cap

₹950 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

13.4x

Cheap

Cheap against the generic band

P/B Ratio

10.31x

Rich

Steep premium to book — needs high, durable returns to justify

EPS (TTM)

₹4.41

Profitable

Profitable on a per-share basis

ROE

87.4%

Strong

Strong capital efficiency

ROCE

67.8%

Strong

Earns comfortably above its likely cost of capital

Debt/Equity

6.90x

High

High leverage

Revenue Growth (YoY)

21.1%

Healthy

Healthy top-line growth

Profit Growth (YoY)

-21.5%

Falling

Profits are shrinking

Dividend Yield

None

No dividend yield reported — usually means no payout, but verify if one was recently initiated

Free Cash Flow

-₹26 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

Operating Margin

6.0%

Average

Average margins

Net Margin

2.9%

Weak

Very little revenue reaches the bottom line

Current Ratio

0.71

Tight

Tight short-term liquidity

Beta (vs Nifty)

0.28

Defensive

Steadier than the market

52W Range Position

20%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

59.1 / 62.7

Bearish alignment (short < long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

44.1

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹308 Cr	₹244 Cr	₹383 Cr	₹390 Cr	+8.2%
EBITDA	₹335 Cr	₹144 Cr	₹179 Cr	₹183 Cr	-18.3%
EBITDA Margin	109.0%	59.0%	46.7%	46.9%	—
PAT (Net Profit)	₹185 Cr	₹6 Cr	₹64 Cr	₹80 Cr	-24.3%
EPS	₹11.5	₹0.35	₹3.99	₹4.99	-24.3%
ROCE	—	—	160.3%	67.8%	—
Total Debt	₹1,494 Cr	₹1,583 Cr	₹664 Cr	₹634 Cr	-24.8%
Free Cash Flow	₹677 Cr	₹143 Cr	₹101 Cr	-₹26 Cr	—

🟢 Revenue has grown at 8.2% a year over 3 years.

🔴 EBITDA has shrunk at 18.3% a year over 3 years.

🔴 EBITDA Margin has fallen from 109.0% to 46.9% over 3 years (-62.1 pts).

🔴 PAT (Net Profit) has shrunk at 24.3% a year over 3 years.

🔴 EPS has shrunk at 24.3% a year over 3 years.

🔴 ROCE has fallen from 160.3% to 67.8% over 3 years (-92.5 pts).

🟢 Total Debt has shrunk at 24.8% a year over 3 years.

🔴 Free Cash Flow has turned negative, from ₹677 Cr to -₹26 Cr.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹2,333 Cr

Total Liabilities

₹2,241 Cr

Cash & Equivalents

₹142 Cr

Operating Cash Flow

₹5 Cr

Capex

-₹31 Cr

Peer Comparison

Company	P/E	ROE
TATA STEEL LIMITED	19.8x	10.8%
JSW STEEL LIMITED	12.0x	24.7%
ULTRATECH CEMENT LIMITED	37.6x	11.1%
ASIAN PAINTS LIMITED	46.9x	22.3%

Recent News

1 negative5 general

Madras Fertilizers vs Nifty 50: Share Price Performance Compared

Univest, 05 Oct

Madras Fertilizers standalone net profit declines 21.49% in the June 2026 quarter

Business Standard, 11 AugResults

🔴Potentially negativeReported deterioration, which feeds the growth and margin inputs on this page directly.

Madras Fertilizers Ltd. Key Financial Ratios – Valuation, Profitability & More

Value Research, 03 Sept

Madras Fertilizers halts plant ops on Jun 15, resuming Jun 23

scanx.trade, 15 Jun

Why FACT, Rashtriya Chemicals, Paradeep Phosphates, Madras Fertilizers surged up to 14% today? Here’s...

Moneycontrol.com, 25 Aug

Why did FACT, RCF, NFL and other fertiliser stocks rally up to 14% today? Explained

Livemint, 25 Aug

Watch Items

Cross-check against the company's latest quarterly filing / investor presentation before acting.

DalalBaazaar Thesis

StrongBusiness Quality · Profitability · Valuation

WeakFinancial Health · Growth · Risk

Points for each in the Score ↑

Unremarkable in both directions

A reasonable business at a reasonable price. Nothing here is alarming and nothing is compelling, which usually means the decision rests on things this data cannot see — the industry's direction, management's intent, and what else is available to you. 3 high-severity red flags sit above this conclusion and should be read first.

3 of 5 tripwires tripped — Debt / EBITDA falls below 3x; Free cash flow remains positive; Interest cover stays above 3x · see Key things to watch ↑