Emkay Global Financial's report on Coromandel International
CRIN delivered its best-ever Q1 EBITDA of Rs4.1bn (+111% yoy). The early onset of monsoon, backward integration of Phos Acid (RM) and robust demand in crop protection (CP) and nutrient segments aided EBITDA growth. CRIN capitalized better than the industry on robust demand and increased the retail market share by 280bps to 14.8%. Our back of the envelope calculations suggest that manufactured fertilizer EBITDA/ton stood at ~Rs4050/ton, which is at the higher end of management guidance of Rs3500-4000/ton. The CP business bounced back on growth with 55% revenue growth. Adjusted for the plant shutdown in the base quarter, our calculations suggest comparable growth of ~32%, which is above of our expectation. CRIN’s investment in R&D (102% jump over FY18-20) has started to yielding results in the CP business and we expect an upward trajectory in the coming quarters.
Backward integration in the fertilizer business has reduced the volatility in profits as well as aided in margin improvement. We remain positive on CRIN due to: 1) a structural change in the nutrient segment ROCE, 2) lower exchange rate risk than the historical trend, and 3) aggressive new launches in the CP segment. We maintain Buy with a TP of Rs910, based on 19x Jun-22E EPS. We remain marginally UW in our EAP.
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