Coromandel International Ltd. share price target

Net sales increased by 5% to ` 23.7bn, 2% lower than our estimate. The capacity utilization during the quarter was low at 70% owing to a plant shutdown in March which led to a low single digit revenue growth. Gross margins contracted by 185bps to 30.7% owing to increase in phosphoric acid prices. Other expenses include ` 350-400mn of provisioning for port rental leasing which was a one time cost. Rupee depreciation led to forex loss of ` 300-350mn. The above factors led to sharp EBITDA decline of 38%...

Coromandel's EBITDA fell by 38% yoy to Rs1.7bn due to higher other expenses (+46% yoy) and costlier RM (+8% yoy). Increase in other expenses was due to forex loss of Rs300-350mn and one-time provision of Rs350-400mn made towards the lease rental. Fertiliser segment revenue grew by mere 3% yoy to Rs20.6bn, as volume stood flat yoy. Segment EBIT declined by 33% yoy to Rs1.5bn. EBIT margin contracted by 380bps yoy...

Coromandel delivered a strong performance in Q3FY18 and is on course to achieve our EBITDA/PAT CAGR estimate of 16%/30% over FY17-20. We expect RoE to expand to 23% from 17%. Growth will be led by high-margin/ high-RoCE non-fertilizer business (EBITDA CAGR at 22%)

Coromandel International Ltd Q3FY18 results comment Revenue decreased by 26.1% to Rs. 2694.87 Cr in Q3FY18 when compared to the previous quarter. On the other hand, it increased by 20.57% when compared with Q3FY17

Over FY17-20E, Coromandel's EBITDA/PAT will grow at 16%/29% p.a. and RoE expand to ~25% (vs. 17% in FY17). The growth will be led by high-margin/ high-RoCE non-fertilizer business (EBITDA CAGR at 22%)

Going gets better: Industry-wide fertilizer inventories have declined by 30-40% from Mar '17 levels, which augurs well for volumes/ margin. Also, before Direct Benefit Transfer rollout from Apr '18, government will clear all old subsidy arrears for fertilizer players

Revenue increased by 1.01% to Rs. 2247.45 Cr in Q4FY17 when compared to the previous quarter. On the other hand it decreased by 25.08% when compared with Q4FY16.

Coromandel's FY17 EBITDA margin on self-produced fertilizers stood at ~Rs 2,200/tn (mgmt. guidance of Rs 2,000/tn) even after weak Q1FY17 and government-enforced fertilizer price cuts (in July '16).

Coromandel Internationals (CRIN) 4QFY17 revenue came in at Rs 22.6bn (-25% YoY), owing to both lower volumes (-5%, to avoid excess channel inventory) and realisations. However, a greater share of manufactured vs. traded volumes and higher NPK share led to an EBITDA of Rs 2.7bn ( 36%). Low interest cost (-17%, special banking arrangement for subsidy) further boosted APAT to Rs 1.4bn ( 56%).

Coromandel's EBITDA margin on self-manufactured fertilizer rose to Rs 2,550/tn led by (a) higher share of unique grades at 42% vs. 33% in FY16 and (b) lower raw material prices more than offset cut in retail prices. Going ahead, volume and margin will be propped by (a) expansion in Phosphoric Acid..