Shares of Deepak Fertilisers and Petrochemicals Corporation Ltd (DFPCL) surged nearly 6 percent in intra-day trade on Tuesday, July 15, after the company signed a major long-term LNG supply deal worth ₹1,200 crore with Petronet LNG. The strategic partnership is set to bolster energy security for the company’s under-construction greenfield ammonia plant in Maharashtra.
Under the 20-year agreement, Petronet LNG will supply around 0.45 million tonnes per annum (mtpa) of liquefied natural gas to Deepak Fertilisers, starting in 2025 and continuing through 2045. This move is aimed at ensuring consistent access to a vital raw material for ammonia production, while also improving cost visibility and reducing dependency on spot gas markets.
As per the agreement, Petronet will regasify approximately 25 TBTUs of LNG annually, following an initial ramp-up period. The regasified gas will be delivered primarily to Deepak Fertilisers’ and its subsidiary PCL’s manufacturing units at Taloja for captive consumption. The deal is valued at ₹1,200 crore, with the potential for an additional 20 percent investment over the contract duration. While the gas supply arrangement is planned for 20 years, the regasification contract is for an initial period of five years.
Other Developments
The LNG deal comes at a time when Deepak Fertilisers is building a 500,000 tonnes per annum greenfield ammonia plant at Chincholi MIDC in Raigad district, Maharashtra. This backward integration initiative is part of the company’s strategy to reduce reliance on imported ammonia and ensure supply chain stability for its fertiliser and chemical segments. The facility is expected to be operational by FY26.
The agreement aligns with the government’s broader push towards reducing import dependency and enhancing local manufacturing capabilities. With this long-term tie-up, Deepak Fertilisers not only secures raw material access but also shields itself from future volatility in energy prices, thereby potentially improving margins once the new facility goes live.
Robust Q1 Earnings Reflect Strength
The announcement comes on the back of a strong Q1 performance. Deepak Fertilisers reported a 75.43 percent year-on-year growth in consolidated net profit, which rose to ₹200 crore for the June quarter of FY25 from ₹114 crore a year ago. However, revenue declined marginally to ₹2,281 crore from ₹2,313 crore due to weaker commodity prices.
The company also noted that Q1 of the previous year included a one-time subsidy impact of ₹161 crore on channel inventory and warehouse stock, which made the year-on-year comparison more favorable in terms of profit.
Stock Price Trend
The stock touched an intraday high of ₹1,658 on July 15, marking a 5.6 percent gain. Although it is still shy of its recent 52-week high of ₹1,776.95 touched earlier this month, the scrip has delivered multibagger returns of 103 percent over the past year.
While the stock has corrected slightly in July so far, slipping more than 5 percent, it had gained consistently for four straight months prior. It rose 15 percent in June, 16 percent in May, 14.6 percent in April, and 17 percent in March, showcasing strong investor confidence in the company’s strategic direction. It had declined 16 percent in February and 5 percent in January.
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