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Buy Coromandel International; target of Rs 1000: Sharekhan

Sharekhan is bullish on Coromandel International has recommended buy rating on the stock with a target price of Rs 1000 in its research report dated February 02, 2021.

February 09, 2021 / 10:30 PM IST
 
 
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Sharekhan's research report on Coromandel International


Q3FY2021 operating profit at Rs. 499 crore (up 15.6% y-o-y) was ahead of our estimate, led by 95 bps beat in OPM at 14.1%, given strong gross margin at 32.7% (up 118 bps y-o-y) and operating efficiencies. PAT at Rs. 333 crore (up 25.8% y-o-y) further benefited from lower interest cost. Good agronomics, new product launch and capex of Rs. 750 crore-900 crore over FY2021E-FY2022E is expected to drive 18% PAT CAGR over FY2020-FY2023E along with high RoE of 25%. Likely clearance of past subsidy dues given additional allocation of Rs. 65,000 crore for fertiliser subsidy would reduce working capital and further strengthen the balance sheet (Coromandel received Rs. 1,366 crore in January as against outstanding subsidy of Rs. 2,853 crore as of December 2020).


Outlook


We maintain our Buy rating on Coromandel International with unchanged PT of Rs. 1,000. At the CMP, the stock trades at 15.1x its FY2022E EPS and 13.3x its FY2023E EPS (at a discount of 18% to its historical average one-year forward PE multiple of 16.3x).


For all recommendations report, click here


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first published: Feb 9, 2021 10:30 pm

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