Buy Coromandel Int; target of Rs 359: PINC Research

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Buy Coromandel Int; target of Rs 359: PINC Research

PINC Research is bullish on Coromandel International and has recommended buy rating on the stock with a target of Rs 359 in its October 18, 2011 research report.

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RELATED NEWS Hold Hero Motocorp; target Rs 2200: KRChoksey Accumulate Zee Entertainment; target of Rs 130: PLilladher Accumulate Oberoi Realty; target of Rs 275: Emkay ALSO READ See previous views by PINC Research See what other Experts & Brokerages are saying about Coromandel Int See messages about Coromandel Int Coromandel Int BSE | NSE 01/06/12 Are Mutual Funds betting on Coromandel Int?

PINC Research is bullish on Coromandel International and has recommended buy rating on the stock with a target of Rs 359 in its October 18, 2011 research report.

"Coromandel International's (CIL) Q2FY12 net sales de-grew by 1.7% YoY to Rs27.1bn due to decrease in volume. EBITDA declined by 24% YoY (in Q2FY11 there was a prior year subsidy of Rs ~2bn) and consequently net profit decreased by 20.4% YoY to Rs2.8bn. In Q2FY12, CIL has sold the remaining fertiliser bond to RBI and consequently has taken 50% loss (Rs427mn) in other expenses and has rolled back Rs689mn MTM provision provided earlier. Adjusting for the net one time gain PAT is in line with our estimate of Rs2.5bn."

"Higher international fertilisers' prices and delay in MOP contracts resulted in lower trading volumes in Q2FY12 for the entire sector. For Coromandel International trading volumes and manufactured voulme declined by 32% and 12% YoY respectively (volume details given in page:2). However, significant jump in farm-gate realisation YoY and higher subsidy from Govt. resulted in only 1.7% de-growth in net sales. EBITDA margin decreased by 600bps YoY to 14.9% as there is no prior period subsidy in Q2FY12 against Rs1.97bn in Q2FY11. H1FY12 has been a tough year for fertiliser industry due to higher international prices of raw materials & fertilisers and has resulted in degrowth in sales volume. We expect pressure to continue in near future, however, we are positive on complex space for the long term due to favourable govt policy action and huge demand-supply gap. CIL further fits in the equation with its increasing non-subsidy portfolio through speciality fertiliser, pesticide, farm mechanisation, retail and organic manure. Acquisition of Sabero Organics will further boost its plan."

"We have decreased our earning estimate by 6.9% for FY12 due to decrease in volumes assumption, however, we have maintaind our estimates for FY13. At the CMP of Rs310, CIL trades at PER of 11.7x and 9.5x and EV/EBITDA of 7.7x and 6.2x for FY12 and FY13 respectively. We are positive on complex fertiliser space and Coromandel International is our top pick in the sector. We maintain our 'BUY' recommendation with a target price of Rs 359 (11x FY13E EPS)," says PINC Research report. 

Institutional holding more than 40% in Indian cos

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To read the full report click on the attachment