Up 200% in 2 years! Should you buy this fertilizer stock after 644% jump in Q4 net profit?

Small-cap stocks to buy: Paradeep Phosphates share price extended its winning streak for the second consecutive trading session on Monday (May 12), gaining another 7% to hit the day’s high of ₹152 apiece. Today’s sharp rally in the share price reflects the continued bullish sentiment in recent weeks, even as the broader market witnessed heightened volatility, further exacerbated last week by India-Pakistan trade tensions.

As a result, the shares have delivered a massive return of 61% over the last two months, significantly outperforming the Nifty Smallcap 100 index, which returned just 10.42% during the same period.

Paradeep Phosphates posts a 644% YoY jump in Q4 net profit

The company reported strong performance in Q4FY25, which beat estimates on account of strong volume growth in an otherwise lean quarter and gross spread expansion due to a favourable product mix. The stock also received a higher target price as a result.

For Q4FY25, the company posted a sharp 644% year-on-year jump in consolidated net profit to ₹160 crore, aided by a low base. In the December quarter, the company had reported a net profit of ₹159 crore. Revenue from operations jumped 56% year-on-year to ₹3,494 crore, while EBITDA grew by 119% to ₹389 crore, and EBITDA margins expanded by 300 basis points to 10%.

For FY25, the company posted a 452% year-on-year surge in profit after tax (PAT), powered by record fertilizer sales of 3.03 million tonnes. Revenue from operations stood at ₹13,820 crore, registering a 19% growth over the previous year. EBITDA rose sharply to ₹1,367 crore, up 91% year-on-year.

On a full-year basis, the company achieved its overall sales volume (including trading) guidance of 3 million metric tons (MMT) by FY25, ahead of its initial FY26 guidance. To continue its 5–7% p.a. volume growth ambition over the next 2–3 years, it is in the process of debottlenecking its capacities by approximately 5–7%.

These record sales volumes were underpinned by strategic sourcing, a diversified NPK production mix, focused sales and marketing efforts, and strong fiscal and operational discipline, the company said in its March earnings report.

Paradeep Phosphates Ltd. (PPL) is a leading company in India’s phosphatic fertilizer industry, with a total production capacity of 3 million metric tons (MT), including 2.6 million MT of phosphates and 0.4 million MT of urea.

JM Financial sets a record target price for the stock

Following the company’s stellar performance in Q4 and for the full fiscal year (FY25), domestic brokerage firm JM Financial revised its target price higher to ₹160 apiece, which is the record target price for the stock. The brokerage maintained its 'Buy' rating.

The brokerage believes that the company will be able to continue delivering robust volume growth, supported by a favourable monsoon.

It expects the company to register a 7% volume growth CAGR over FY25–28E. Benefits from phosphoric acid backwards integration, the Goa energy efficiency project, and an increase in NPK volumes as a percentage of overall volumes to 73% are expected to help EBITDA per kg rise to ₹5/kg in FY27E, up from ₹4.1/kg in FY25.

Factoring this in, JM Financial has raised its FY26/27 EBITDA and EPS estimates by 7–10% and anticipates Paradeep Phosphates to register 14%/19% EBITDA/EPS CAGR over FY25–28E.

Paradeep Phosphates share price delivers over 200% return in 2 years

The company's shares have surged from ₹50 to the current trading price of ₹152 apiece over the last two years, resulting in a massive gain of 204%. The stock touched a new all-time high of ₹153.50 apiece on April 29.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.