Moneycontrol PRO
Upcoming Webinar:Innovate Your Future at India Inc. on the Move on August 26 and 27, 2021 at 10am, with Rockwell Automation
you are here: HomeNewsBusiness

Buy Coromandel International; target of Rs 910: Emkay Global Financial

Emkay Global Financial is bullish on Coromandel International has recommended buy rating on the stock with a target price of Rs 910 in its research report dated February 02, 2021.

February 12, 2021 / 05:11 PM IST
 
 
live
  • bselive
  • nselive
Volume
Todays L/H
More

Emkay Global Financial's research report on Coromandel International


CRIN missed our EBITDA/PAT estimates by 2% in Q3 mainly due to lower-than-expected margins in traded complex fertilizers. However, manufactured fertilizer EBITDA increased 2.7% yoy to Rs4,160/ton (Emkay est). Gross margin improved 118bps yoy to 32.7%. Overall EBITDA margin expanded 96bps yoy to 14.1% (vs. 13.9% Emkay est). Phos acid (key RM) prices increased 15% qoq in Q4FY21 to USD795/mt from USD689/mt in Q3FY21. Our back-of-the-envelope calculations suggest a 15-20% increase in consumer prices. Management said that the industry has not yet raised prices due to low cost inventory. We believe that there could be some pressure on volumes going into FY22 as companies raise prices. We decrease our EBITDA margin estimates for FY22/23 by 32bps/9bps on the back of lower gross margin assumption in the fertilizer segment. We reduce our target P/E multiple to 17x (vs. 18x earlier) due to lack of meaningful capex in the fertilizer segment and RM price pressure.


Outlook


We roll forward our valuations to Mar’23E EPS (vs. Sep’22E EPS earlier). Our TP remains unchanged at Rs910/sh as the lower multiple is compensated by 1) roll forward, and 2) increase in EPS due to lower interest expense (lower WC assumption due to subsidy receipts). We maintain Buy with UW stance in EAP.


For all recommendations report, click here


Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

Broker Research
first published: Feb 12, 2021 05:11 pm

stay updated

Get Daily News on your Browser
Sections
ISO 27001 - BSI Assurance Mark