Coromandel International Ltd. share price target

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..

Coromandel International?s (CRIN) 3QFY17 revenues were at Rs 22bn. Impact of lower realisation was negated by strong volumes ( 17% YoY for complex fertilisers). Higher share of manufactured vs. traded volumes and lower RM cost boosted EBITDA to Rs 2.4bn ( 42%). APAT was Rs 1.1bn ( 75%).