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Last Updated : May 13, 2020 04:22 PM IST | Source: Moneycontrol.com

Buy Coromandel International; target of Rs 738: Motilal Oswal

Motilal Oswal is bullish on Coromandel International has recommended buy rating on the stock with a target price of Rs 738 in its research report dated May 11, 2020.

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Motilal Oswal 's research report on Coromandel International


Coromandel International (CRIN)’s key markets are Andhra Pradesh (AP), Telangana, Maharashtra, Karnataka, West Bengal, and Odisha. These six states account for 94% of CRIN’s NPK/DAP volumes and 84% of its overall volumes.  Key crops grown in the regions mentioned above include paddy, pulses, cotton, soybean, and maize. Thus, the acreage movement in the above crops would have a bearing on CRIN’s performance.  Prices of paddy (down 9% YoY) and soybean (flat YoY) have remained firm (relatively); thus, the sowing of these crops is likely to continue at similar levels in the upcoming kharif season, particularly in the southern region.  However, cotton prices (20% down YoY) have plummeted due to the current crisis; hence, farmers may shift to alternate crops such as groundnuts (up 7% YoY) and soybean. The key reason for the shift from cotton to this crop could also be attributable to lower yield in the previous season due to a pink bollworm infestation and excess rainfall.


Outlook


We have ascribed a 17x PE multiple (in-line with the five-year average multiple) and arrived at TP of INR738. Maintain Buy.


For all recommendations report, click here


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First Published on May 13, 2020 04:22 pm
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