Top 3 Capex - 2025
Jul 30, 2025
6 mins to read
1) Deepak Fertilizers:
What does the Co do?
Deepak Fertilisers is a leading chemical and fertilisers producer in India with over 40 years of experience.
The company has three main business verticals: Mining Business (Technical Ammonium Nitrate - TAN), Crop Nutrition Business (CNB), and Industrial Chemicals (IC).
It operates six manufacturing sites.
Business segments
Mining Business (TAN) (34% revenue)
Products include high-density and low-density ammonium nitrate.
End markets served are mining, infrastructure, and explosives.
It holds a 40% domestic market share in TAN and is the only manufacturer of solid TAN in India.
The company aims to move towards providing a total cost of operation (TCO) approach, including blasting services.
Crop Nutrition Business (CNB) (21% revenue)
Products include specialty complex fertilisers (Smartek & Croptek), water-soluble fertilisers, and Bentonite Sulphur (Bensulf).
Deepak Fertilizers is the largest manufacturer of Bentonite Sulphur in India and a leading player in specialty and water-soluble fertilisers.
The 'Mahadhan' brand has a strong presence in Maharashtra, Karnataka, and Gujarat.
The business is focused on moving from commodity NPKs to crop-specific NPKs.
Industrial Chemicals (IC) (44% revenue)
Products include various grades of Nitric Acid, Iso Propyl Alcohol (IPA), Methanol, and Liquid CO2.
End markets served include pharma, nitroaromatics, and explosives.
It is the largest manufacturer of Nitric Acid in South East Asia and a major player in the merchant IPA market in India.
The company is strategically entering the pharma solvent market and exploring high-purity chemicals like electronic-grade IPA.
How much capex they have done?
It has an attractive capex program underway worth ₹4,500 crores.
This includes a TAN project at Gopalpur with a capacity of 376 KTPA and a Nitric Acid project at Dahej with capacities of 300 KTPA of Weak Nitric Acid (WNA) and 150 KTPA of Concentrated Nitric Acid (CNA).
The expected commissioning for both projects is in the second half of FY26.
As of the Q3 FY25 approximately ₹1,300 crores of the total ₹4,500 crores capex had been spent.
The remaining capex to be spent from Q4 FY25 until project completion is around ₹3,200 crores.
Total capex for Deepak for the first nine months of FY '25 was roughly around ₹700 crores to ₹800 crores.
How can operating leverage play out
The company has achieved high capacity utilisation across its existing businesses, ranging from 85% to 95%. This suggests that increased volumes from existing assets are already contributing to better operating leverage.
The upcoming capacity expansions in TAN and Nitric Acid are expected to further enhance operating leverage once these plants become operational and ramp up to optimal utilisation levels. The company anticipates a fast ramp-up due to their experience with similar plants.
Key triggers in the business that will play out
Commissioning of new capacities: The TAN plant in Gopalpur and the Nitric Acid facilities in Dahej, expected in H2 FY26, will significantly increase production volumes and revenue. Post-expansion, DFPCL will become the 3rd largest pure-play TAN producer globally and Asia's largest Nitric Acid manufacturer.
Backward integration benefits: The stabilisation and efficient operation of the new 5 lakh tons per annum ammonia plant will provide a consistent supply of a key raw material and a competitive edge. Surplus ammonia can be sold in the merchant market.
Shift to specialty products: Continued focus on and growth in specialty fertilisers (Smartek, Croptek) and specialty chemicals (steel-grade nitric acid, pharma-grade IPA, electronic-grade IPA) will drive higher margins and potentially more stable revenues. The company aims to increase the share of specialty businesses in its overall portfolio.
LNG supply from Equinor: The commencement of LNG supply from Equinor in Q1 FY27 is expected to significantly reduce gas costs by over 20%, improving the cost structure and break even point.
Favourable demand environment: Strong alignment of all three businesses with the India growth story, including infrastructure development (driving TAN demand), increasing income levels and changing food habits (driving crop nutrition demand), and the China plus One strategy and push for specialty chemicals (driving industrial chemicals demand). Demand for TAN is expected to strengthen in Q4 FY25 due to peak production in mining and infrastructure. IPA demand is expected to remain robust from the pharmaceutical sector.
Anti-dumping duty on IPA: The implementation of an anti-dumping duty on IPA is expected to improve IPA margins in the coming quarters.
Risks
Project execution risks: Delays in the commissioning or cost overruns in the Gopalpur and Dahej projects could impact the company's growth plans and increase debt levels beyond the currently anticipated peak of ₹5,500 crores net debt towards H2 FY26.
Ammonia price volatility: While the new ammonia plant provides some insulation, fluctuations in global ammonia prices, especially a sustained period below the breakeven level, could negatively impact the profitability of the ammonia business.
Competition: Increased import of low-cost nitroaromatics is currently impacting downstream nitric acid customers and putting pressure on pricing. Competition in the TAN market from imports, although currently normalised compared to the previous year, remains a factor.
Seasonality: The crop nutrition business is subject to seasonality, with performance depending on monsoon patterns and agricultural cycles.
Geopolitical events and Regulatory risks: Although the direct impact of recent geopolitical events on the TAN business has normalised, future unforeseen events could still impact supply chains and demand.
2) HCG
What does the Co do?
HCG is the largest pan-India oncology hospital chain.
The company is dedicated to cancer care with comprehensive cancer centres.
They offer end-to-end services in cancer care, from diagnostics to treatment and post-care.
Business segments
HCG primarily operates in the oncology space.
They have a network of 25 centres including 4 multi-specialty hospitals.
HCG also has a fertility business under the brand name Milann, although its strategic future is being considered but it is an optionality that can play out in the future.
The diagnostic business has been restructured under the brand name Triesta to foster wider reach.
Capital Expenditure (Capex):
Total capex for 9 months was INR 172 crores.
The guidance for annual capex in FY25 and FY26 is in the range of INR 275 crores to INR 280 crores per annum, of which around INR 100 crores per annum is maintenance capex.
Post FY26, capex is expected to normalise to around INR 100 crores of maintenance capex so operating leverage will play out
Ongoing capex includes:
North Bangalore: Planned capex of INR 900 Mn with expected operation in Q3 FY26. Capex incurred till December 31, 2024 was INR 136 Mn.
Whitefield (Bangalore - COE extension): Planned capex of INR 290 Mn with expected operation in Q1 FY26. Capex incurred till December 31, 2024 was INR 52 Mn.
Bed Capacity:
Total operational beds as of Q3 FY25 were 1,518.
Established centres had 1,346 operational beds (1,982 total operational beds - 636 beds related to MG Hospital Vizag based on total revenue contribution split Q3FY25).
There are an additional 301 beds available to be made operational.
Expansion underway in existing premises (brownfield) with very high return on incremental capital expected. This suggests capacity additions without significant greenfield investment.
Key triggers in the business that will play out
KKR acquisition- KKR PE has acquired 54% stake in HCG. They have really good experience in the healthcare space. Turnaround JB Chemicals etc
Turnaround and ramp-up of emerging centres, particularly South Mumbai and Kolkata, leading to improved profitability.
Operationalisation of new brownfield centres in Bangalore (North Bangalore and Whitefield extension) in FY26, which will add capacity and contribute to revenue growth.
Continued strong performance and growth in established centres driven by increasing patient volumes and complex case mix. Established centres have been growing upwards of 12-13%.
Increasing contribution from digital channels, with digital revenues growing by 114% for 9MFY25 year-on-year, suggesting a more efficient patient acquisition and engagement model. HCG aspires to get 25% of overall revenue through digital channels in 3-5 years.
Focus on complex and advanced procedures such as Bone Marrow Transplants (BMT) and robotic surgeries, which typically have higher revenue per patient.
Risks
Seasonality in the business, with Q3 typically being a weaker quarter due to festivities, impacting revenue and operating leverage.
Delays in operationalising ongoing capex projects could impact growth timelines.
Lower EBITDA margins in established centres on a year-on-year basis, despite revenue growth, attributed to seasonality and a relatively higher revenue contribution from the pharmacy business which has lower gross margins.
Challenges in the Milann (fertility) business due to competition, although a turnaround is anticipated. The company is also considering divestment at the right time.
Competitive landscape in the healthcare industry with competition from Apollo,Max,NH,Fortis etc.
3) SRF
What does the Co do?
SRF Limited is engaged in the manufacturing of industrial and specialty intermediates.
The company's diversified business portfolio covers Fluorochemicals, Specialty Chemicals, Packaging Films, Technical Textiles, and Coated and Laminated Fabrics.
SRF exports to over 100 countries.
It operates thirteen manufacturing facilities in India and one each in Thailand, South Africa, and Hungary.
SRF has a strong focus on research and development, with 460+ patents applied for and 150+ granted.
Business segments
SRF has four main business segments based on revenue contribution as of March 31, 2024:
Chemicals: Includes Specialty Chemicals and Fluorochemicals. This segment contributed 48% to the revenue.
Specialty Chemicals: Produces intermediates for AI/API/Specialised Applications and offers Contract Development & Manufacturing.
Fluorochemicals: Produces Refrigerants, Pharma Propellants, Industrial Chemicals, and Fluoropolymers.
Packaging Films: Includes films for flexible packaging such as Bi-axially Oriented Polyethylene Terephthalate (BOPET) and Bi-axially Oriented Polypropylene (BOPP), and Aluminium Foil. This segment contributed 34% to the revenue.
Technical Textiles & Others: This segment contributed 18% to the revenue.
Technical Textiles: Produces Tyre Cord Fabrics (Nylon & Polyester), Belting Fabrics, and Polyester Industrial Yarn.
Others: Includes Coated Fabrics and Laminated Fabrics.
How much capex they have done
For FY26, the capex for current and certain future projects is expected to be in the range of INR 1,500-2,000 crore.
The company has been capitalising specialty chemical projects over the last 6-7 quarters, amounting to around INR 2,000 crore.
In the last 5 years Fixed assets have increased from 6400 cr to 13,500 cr almost 2X even sales have 1.8X but the PAT has merely increased by 30%.
Key Triggers for FY26 and Capacity:
Chemicals Business:
SRF is hopeful of ramping up sales for some of their future Active Ingredients (AIs) during FY26, with some potential traction starting in Q4 FY25
Specialty Chemicals The management believes that the specialty chemical projects capitalised over the last 6-7 quarters (around INR 2,000 crore) should see better capacity utilisation in FY26.
Fluorochemicals segment also is expected to show positive traction from FY26 onwards
Packaging Films Business:
The Aluminium Foil facility is expected to contribute positively to the overall performance in FY26
With cash flow glowing down due to good sales, Debt can reduce helping PAT to increase.
Flow-through of reduced interest rates over the past 6-9 months should positively impact the P&L during FY26.
Risks
Tariff Issues and US Revenue:8-10% of SRF's revenue comes from the US.Any adverse changes in tariffs imposed by the US could potentially impact SRF's exports and financial performance.
Agro Exports Slowdown due to Potential Chinese Dumping:The broader chemicals industry continues to witness some overhang of inventory buildup among agrochemical customers. If the US imposes further restrictions on China, it is plausible that Chinese manufacturers might increase exports to other countries, potentially leading to increased competition and pricing pressure in those markets for SRF's agro intermediates.
Delay in Capacity Ramp-Up:The learning cycle for the Aluminium Foil capacity ramp-up has been longer than expected .Specialty chemical projects, it will probably take between 12 to 18 months for it to fully ramp up . Any delays can cause issues
Margin Pressure in Packaging Films:There is a demand-supply imbalance in the short to medium term, which still remains.
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