Oct 24, 2011, 01.20 PM | Source: Moneycontrol.com
Prabhudas Lilladher is bullish on Coromandel International and has recommended buy rating on the stock with a target of Rs 386 in its October 19, 2011 research report.
, Prabhudas Lilladher |
“Coromandel International’s (CRIN’s) net sales degrew by 1.8% to Rs27.2bn YoY (v/s PLe: Rs26.4bn) despite a decline of 11.1% YoY in fertiliser (manufactured as well as traded) sales volume during Q2FY12. It has been offset by higher fertiliser realization that was led by higher subsidy and farm gate prices. CRIN’s EBITDA de-grew by 29.3% YoY to Rs3.8bn (PLe: Rs3.2bn) since the company received Rs2bn as prior period subsidy during the corresponding quarter of the previous year. Excluding prior period subsidy, EBITDA grew by 12.2% YoY during Q2FY12. Company’s raw material consumed as % of sales has improved by 80bps (excluding earlier subsidy), resulting in better-than-expected EBITDA margin (i.e.13.8% v/s PLe: 12.2%). CRIN’s PAT degrew by 27.3% YoY to Rs2.6bn (PLe: Rs2.2bn).”
“CRIN is planning to set up 800MT/Day of single super phosphate (SSP) plant in Punjab. Further, the company has announced one fullypaid bonus debenture of Rs15 for every equity share held in the company. During the quarter, industry as well as CRIN has taken price hike of ~50% in all type of non-urea fertilisers to pass on the higher raw material cost and to offset rupee depreciation. We believe that CRIN would be able to maintain its per tonne EBITDA v/s FY11 in the coming quarters.”
“We expect CRIN to post sales and PAT FY11-13E CAGR of 32.1% and 12.4%, respectively, with a strong RoE of ~31%. CRIN is trading (one year forward P/E of 11x v/s peers P/E of 8x-10x) at a premium as compared to its domestic peers on the back of differentials in growth, ROE and robust business model. We believe that it would trade at a premium too, going forward. Considering CRIN’s strong business models, future growth and return ratios, we recommend ‘BUY the stock, with the target price of Rs 386 (i.e. 13xFY13E EPS),” says Prabhudas Lilladher research report.
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