Buy Coromandel International; target of Rs 275: Emkay

Emkay research report on Coromandel InternationalQ2FY16 revenues at Rs 35.6bn (+3%yoy) and EBIDTA at Rs 3.1bn (-9%yoy) was marginally higher than our estimates Complex fertiliser volume growth of 8% was in line while non fertiliser business was affected due to poor monsoon. However, EBIDTA margins at 17.6% in non fertiliser business and EBIDTA / mt of Rs 2,500/ mtd in fertiliser was in line Near term environment remains challenging due to poor monsoon and hence we downgrade our FY16/17E EPS est by 26%/21% to factor such weakness Coromandel enjoys strong presence in complex fertiliser and growing its non fertiliser business by leveraging its distribution strength and retail network. We maintain our Buy reco with price target get of Rs 275 (based on 15xFY17E) Coromandel continues to gain market share in its key market while poor monsoon has adversely affected its fertiliser as well as non fertiliser business. To factor this weakness we have downgraded our FY16/17E EPS est by 26%/21% to Rs 14.3/18.3. Coromandel enjoys RoE of ~18% and strong balance sheet with net D/E of 0.3x. Though near term environment remains challenging due to poor monsoon, Coromandel enjoys strong presence in complex fertiliser through its strong distribution reach. We maintain our Buy reco with price target of Rs 275 (based on 15xFY17E).For all recommendations, 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.

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