Coromandel Fertilisers can test Rs 200: R Shah

Rajen Shah of Angel Broking is of the view that Coromandel Fertilisers can test Rs 200.

Shah told CNBC-TV18, "Coromandel Fertilizer belongs to the Murugappa Group and absolutely clean management. I would call it the Infosys of the fertilizer space. The company is doing pretty well; this year also I am extremely bullish on the fertilizer space, performance is expected to be very robust. This year we are expecting the company to report earnings of about 16.5 for ’09 so the peak works out to just about 7.5 times the current year earnings and the Sensex is about 14 times. The best part about this company is that when the index was 21,000 the stock was at about Rs 145 levels and today when the Index is down 33% the stock is down hardly Rs 20 from that levels and it is currently quoting at about Rs 123. That clearly shows the strength."

He further added, "The real big thing is going to happen is the Foskor deal, which it signed about three years back in April 2005. When the deal was such that Foskor was a very big loss making entity and was reporting a loss of Rs 250 crore and the deal was that the Coromandel will handle the plant of Foskor and make it more efficient and profitable. Today this year Foskor is going to report a profit of Rs 350 crore and the deal was such that Coromandel would then be offered 15% stake in Foskor."

"Foskor is one of the biggest companies in South Africa having lot of rock phosphate mines and rock phosphate’s price has actually gone up at least four times over the last two years. So Coromandel stands to gain from Rs 250 crore of loss in 2005 to about Rs 350 crore of profit in the current year. So obviously Coromandel is going to get about 15% stake in Foskor and the value of that stake is set to be to the tune of about Rs 500-600 crore at the minimum. So this stock could turn out to be winner actually irrespective of where the Sensex heads and we are looking at a price of at least Rs 200 over the next twelve months irrespective of the Sensex levels."