Coromandel International Ltd. share price target

Initiating coverage on Coromandel International with a Buy rating, valuing it at 20x FY2022 EPS with a PT of Rs. 1,000 Company among India's top integrated agri solutions provider; significant backward integration drives margins, cashflows and return ratios...

The Company expects the recent ban on pesticides to be overturned, CRIN sells 4 out of the 27 molecules banned With the expectation of a normal monsoon, backward integration and new launches, we expect net profit CAGR of 12% over FY20FY22E...

27 May 2020 CRINs 4QFY20 revenue grew 9% driven by higher manufacturing volumes (+13% YoY) and lower RM costs (gross margins expanded 520bp to 35%), which in turn led to 51% YoY EBITDA growth. Maintain 4QFY20 revenue grew 9% YoY. Overall fertilizer volumes declined 4% YoY due to trading volumes plummeting 43% YoY. However, 13% YoY growth in manufacturing fertilizer volumes led to sharp 380bp EBITDA margin expansion to 13.6%. Nutrient and other allied segment revenues grew 7% YoY (to INR24.4b) with 400bp EBIT margin expansion (to 12.8%), due to higher manufacturing volumes (segment EBIT grew 56% YoY to INR3.1b). CRIN has contracted phosphoric acid at USD607/MT for 1QFY21 (v/s USD590/MT in 4QFY20). According to our calculations (assuming EBITDA/MT of INR300 for traded fertilizer), EBITDA/MT for manufacturing fertilizer stood at INR3,733/MT (+31% YoY; -3% QoQ) in 4QFY20. Plant protection revenue grew 22% YoY (to INR4.4b) with EBIT margin contracting 50bp (to 13.

We believe CRIN is one of the best bets in fertilisers space with robust FCF generation and best in-class return profile. We expect it to benefit from a better Rabi season and softening of RM prices in the near-term, while higher level of Backward integration would aid in sustainable margin expansion. The stock has been trading at ~16x of 1-Year forward EPS over the last 3 years and we value it at 15x FY22E EPS. Maintaining our Target Price of Rs606, we revise our...

3 February 2020 3QFY20 revenues grew 8% driven by higher manufacturing volumes (+33% YoY), which in turn led to 42% YoY growth in EBITDA. While revenue was in line during the quarter, beat of 14%/18% in EBITDA/PAT, led to increase in earnings estimates by 9%/8% for FY20/FY21. Revenue grew 8% in 3QFY20 with overall fertilizer volumes growing a mere 6% due to 44% decline in trading volumes; however, 33% growth in manufacturing fertilizer volumes led to a sharp 320bp EBITDA margin expansion to 13.2%. Nutrient and other allied segment revenues grew 8% YoY (to INR28.4b) with 360bp EBIT margin expansion (to 12.8%), due to higher manufacturing volumes. According to our calculations, in 3QFY20, EBITDA/MT for manufacturing fertilizer stood at INR3,845/MT (+16% YoY; - 5% QoQ). Plant protection revenue grew 4% YoY (to INR4.6b) with EBIT margin contraction of 25bp (to 15.4%) on account of softness in mancozeb prices. For 9MFY19, revenue/EBITDA/PAT grew 3%/13%/33% to INR103b/INR13.4b/INR8.

While trading volumes declined 47% YoY, fertilizer manufacturing volumes, which command higher margins, grew 34% YoY. In 2QFY20 too, CRIN witnessed margin expansion of 140bp YoY led by 9% growth in manufacturing fertilizer volumes (despite revenue decline of 3% YoY). Also, CRIN is expected to report record-high absolute 3Q EBITDA of INR3.8b for the Oct-Dec19 quarter, primarily due to (a) higher sales volume due to better acreage in the Rabi season, (b) benign raw material prices, (c) higher share of manufacturing fertilizer, and (d) cost savings on recently commenced phos acid plant. Further, manufacturing of di-ammonium phosphate (DAP) fertilizers surged 5.9x YoY in 3QFY20, while DAP trading declined a steep 86% YoY due to drop in phos acid prices. Acreage dipped marginally in AP by 1%, despite reservoir levels being at 92% of the storage capacity (v/s 48% last year). Acreage increased 30% YoY with reservoir levels of 70% (v/s 30% last year).

years on the back of growth in sales volumes. Government initiatives to double farmer income to drive demand for fertilizer and crop protection products. Direct Benefit Transfer scheme of the central government has eased pressure on the working capital cycle of CRIN....

15 October 2019 According to the Ministry of Fertilizers data, Coromandel Internationals (CRIN) fertilizer manufacturing volumes grew 8% YoY, whereas trading volumes were down 62% YoY in 2QFY20. Manufacturing of di-ammonium phosphate (DAP) fertilizers increased 72% YoY, whereas trading of DAP declined steeply by 88% YoY in 2QFY19 due to a fall in phos acid prices. In the NPK segment, 20-20-0-13 volumes (41% of NPK volumes in FY19) grew 24% YoY, whereas 28-28-0 volumes (accounted for 22%) declined 10% YoY in 2QFY20. In the fertilizer trading segment, Muriate of Potash (MOP) volumes grew steeply by 66% YoY, whereas urea volumes declined 67% YoY in 2QFY20. Andhra Pradesh (AP), Telangana, Maharashtra and Karnataka are the key markets for CRIN these cumulatively accounted for 66% of total fertilizer volumes and 47% of total manufactured fertilizer volumes in FY19 (NPK volumes from the above states form 75% of NPK sales).

During the quarter, plant protection revenue declined 36% YoY to INR2,710m, with the EBIT margin shrinking 10pp YoY to 2.2%, primarily on account of the shutdown at the Sarigam plant (revenue/EBITDA impact of INR700-800m/INR400-450m) and the softness in mancozeb prices. Additionally, EBITDA/mt for the fertilizer segment stood at INR2,979 up 49% YoY owing to forex gain (INR300m) and lower RM cost. (i) MRP across fertilizers declined by 8-10% owing to a decrease in RM cost. (ii) Company guided for 8-12% revenue growth in FY20, with EBITDA margin of 14-15% in the plant protection business. We cut our earnings estimate by 6%/7% for FY20/21, mainly on account (a) a cut in the EBITDA estimate for the crop protection business by 12%/6.5% for FY20/21 and (b) an increase in depreciation and interest cost. Maintain Coromandel International Crop protection revenue declined 36% YoY to INR2.7b, while nutrient & other allied business revenue was down 12% YoY to INR18.8b.

We expect margin pressure to subside in FY20, due to backward integration in phosphoric acid, coupled with lower RM prices. We expect the non-subsidy business to grow (estimate a 20% CAGR in the crop protection business over FY20-21E to ` 25.0bn). The company expects the plant in Sarigam, which is currently shut, to become operational in 1HFY20. The Dahej plant, which manufactures Mancozeb, has become operational and is likely to lead to volume growth in the crop protection business. The stock is currently available at 15.4x and 13.6x FY20E and FY21E EPS. We...