Coromandel International Limited is India’s second largest Phosphatic fertilizer player, is in the business segments of Fertilizers, Specialty Nutrients, Crop Protection and Retail. The Company manufactures a wide range of fertilizers and markets around 4.5 million tons making it a leader in its addressable markets. The company is No.1 Organic fertilizer marketer in India.
|Market Cap. (Cr.)||23316.26|
|52 Wk. high/low||829.85/348.95|
|Book Value (Rs)||147.28|
Share Holding Pattern %
|Non Promoter Corp.||0.91|
|Public & Others
Coromandel had a resilient performance in Q1 FY21, registering a strong growth despite the unprecedented external environment posed by COVID 19 pandemic. The company’s EBITDA margins grew by 368 bps YoY to 12.8% in Q1FY21 while EBITDA itself grew by 111% YoY to Rs.412cr.
Crop Protection segment had a very good quarter and registered a strong growth of 54% across both exports and domestic market. The business is accelerating its efforts on new product development and strengthening its strategic tie ups with global players.
Phosphatic volume up 75% YoY to 0.83mn tonnes for 1QFY21, while manufactured product sale/DAP imports stood at 0.76mn tonnes/0.06mn tonnes. Market share improved from 12.9% last year to 16.3% in 1QFY21.
In line with the government’s ‘Make in India’ initiative, the Company established a state-of-the-art Phosphoric Acid plant at Vizag. The plant was successfully commissioned in the third quarter of the year. With this, the Company has become self-sufficient for its phosphoric acid requirements for its Vizag plant.
As on August 21, total kharif crops sown has risen 9% to 1,062.93 lakh hectare area, against 979.15 lakh hectare area during the corresponding period of last year on better monsoon.
Central and state governments’ income support scheme for farmers increasing the disposable income in the hands of farmers for agri-inputs.
Prices of natural gas in India are likely to be cut to $1.9- $1.94 the lowest in more than a decade from October. Natural gas is a key raw material for the manufacturing of urea and comprises nearly 70 percent of the total cost of urea production.
Coromandel is a leading manufacturer of phosphatic fertilisers with plants located at Visakhapatnam & Kakinada in Andhra Pradesh and Ennore & Ranipet at Tamil Nadu. The range of products from Coromandel is popularly known by the brand GROMOR. The segment contributes 81% to revenue.
The Crop Protection business produces insecticides, fungicides, herbicides and markets these products in India and abroad. Coromandel is the second largest manufacturer of Malathion and is the major manufacturer of Phenthoate in Asia. Coromandel Crop protection brands have been synchronized to emerge under a stronger brand “GROMOR SURAKSHA”. Company is presently the largest player in neem seed extract-based ‘Azadirachtin’ segment.
In its efforts to promote balanced fertilisation Coromandel intends to be a complete plant nutrition solution Company by adding speciality nutrients/ fertilisers to its portfolio and now offers various customised products to its customers.
Coromandel has also ventured into the retail business in 2007 by setting up around 800 rural retail centers in the States of Andhra Pradesh, Telangana, Karnataka and Maharashtra.
|Particulars (in Rs Cr.)||Q1FY21||Q4FY20||Q1FY20||QoQ (%)||YoY (%)|
|Raw Material Consumed||1287.7||1797||1666.43||-28.3%||-22.7%|
|Purchase of Finished Goods||622.8||112.96||477.63||451.3%||30.4%|
|Selling & Administrative Expenses||193.46||211.31||198.46||-8.4%||-2.5%|
|Profit After Tax||250.57||234.2||62.43||7.0%||301.4%|
|EPS (in Rs .)||8.55||8||2.13||6.9%||301.4%|
|PATM (%)||7.8||8.16||2.93||(36) bps||487 bps|
|EBITDA Margin (%)||12.84%||13.62%||9.16%||(78) bpd||368 bps|
Coromandel International is the leading phosphatic fertilizer manufacturers in India with a market share of 16.3%. It has considerable presence in its home markets of Andhra Pradesh, Telangana and other nearby states where it enjoys a 65% market share. The Government Atma Nirbhar package totaling 20 lakh crore to double farmer’s income will boost demand for fertilizer products. Coromandel International new launches in various segments gained momentum during the quarter and it would focus government announced MSP on the sale of kharif crops, which would lead to minimum 50%+ gains on cost of production for farmers. On the Capex front, the company stated that in the near term, it would focus on de-bottlenecking the fertilizer plants, thereby potentially increasing their capacities as well as optimizing the product mix. Therefore we initiate buy on Coromandel at CMP for the target price of Rs.970.
DISCLOSURE IN PURSUANCE OF SECTION 19 OF SEBI (RA) REGULATION 2014
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