Buy Coromandel Int; target of Rs 410: Unicon Investment

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Buy Coromandel Int; target of Rs 410: Unicon Investment

Unicon Investment is bullish on Coromandel Int and has recommended buy rating on the stock with a target of Rs 410 in its August 16, 2011 research report.

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Unicon Investment is bullish on Coromandel Int and has recommended buy rating on the stock with a target of Rs 410 in its August 16, 2011 research report.

"Coromandel International Ltd (CIL) reported Q1 FY12 result inline with street expectations. Revenue grew by 15.6% YoY to INR 17,901mn while volume dropped by 5% in the quarter. The drop in volume was compensated by increase in farm-gate realisations and reasonable hike in fertiliser subsidy. CIL has successfully passed the hike in raw material prices to its customers. EBITDA expanded by ~28% YoY to INR 2,688mn due to better realisations while EBITDA margin increased to 15% from 13.6% YoY in the quarter. Net profit jumped by 32.3% YoY to INR 1,589mn while PAT margin stood at 8.8% compared to 7.6% same period last year."

"CIL's recent acquisition of Gujarat based agrochemical company Sabero Organics would strengthen its topline growth. Sabero has a wide portfolio of 8-9 products across various categories like insecticides, herbicides and fungicides. Strong synergy benefit is expected from this acquisition going forward."

"CIL's growth trajectory would be further supported by expansion of phosphoric fertiliser capacity in Kakinada, addition of 200 retail stores and healthy monsoon in 2011. Revenue from Kakinada's new capacity is expected to start contribution from H2 FY13. Increase in fertiliser subsidy by GoI and recent hike in prices from the company (w.e.f. Apr 2011) would also boost the FY12 performance. Stock is trading at 10.1x its FY13E earnings. We maintain BUY on the stock with a 18month price target of INR 410," says Unicon Investment research report. 

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