Coromandel International Ltd. share price target

Coromandel International (CRIN) manufactures and trades in farm inputs in India. The company operates in two segments: (1) Nutrient and Other Allied Business and (2) Crop Protection. It offers phosphatic fertilizers, crop protection products, specialty nutrients(such as bentonite sulphur, water soluble and organic fertilizers and micronutrients) and organic compost.

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%).