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 July 01, 2020.
Emkay Global Financial's report on Coromandel International
We upgrade CRIN to Buy from Hold as investors take note of doubling of nutrient segment's ROCE over the last five years. As the increase in ROCE is more structural, we believe that CRIN deserves to trade at a premium to its historical valuations. FY20 has been a transformational year for CRIN. Its fertilizer segment's ROCE (pre-tax) jumped 541bps yoy to 32.1% in FY20. CRIN's strategy to push more NPK and manufactured volumes has paid off. Apart from a change in the product mix, ROCE and EBITDA in the fertilizer segment were aided by 1) lower raw material prices, 2) backward integration of Phos Acid, and 3) robust acreages aided by rainfall in its key geographies (AP/TG/KA/MH).
We upgrade CRIN to Buy with revised TP of Rs910 based on 19x Jun-22E EPS (vs. 17x Mar-22E). We increase our target multiple due 1) change in ROCE profile, 2) backward integration, 3) robust demand environment, and 4) pick up in crop protection segment.
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