Nalanda Securities bullish on Coromandel International has recommended buy rating on the stock with a target price of Rs 495 in its research report dated October 12, 2018.
Nalanda Securities' research report on Coromandel International
The fertiliser industry witnessed the phased roll out of Direct Benefit Transfer (DBT) scheme, that intends to bring traceability across the fertiliser value chain and promote balanced nutrient practices. Considering the mammoth scale and complexity involved in connecting more than 2,00,000 retailers, the industry, along with the Department of fertilisers (DoF), effectively took up the challenge and executed its implementation. DBT signals a significant shift in operating philosophy for the industry, and we expect its scope to be enhanced further in coming years, which will also help the industry to ease the working capital situation.
At CMP of INR 382.15, the company is trading at 7.4x FY20E EV/ EBITDA and 11.1x FY20E EPS. We value the company using average of EV/ EBITDA and P.E. multiple methodology. We have given an exit multiple of 10x for EV/EBITDA and 13x for PE to arrive at an average target price of INR 495 which is an upside of 30%.
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