Accumulate Coromandel International; target of Rs 837: Geojit

Geojit's research report on Coromandel International

Coromandel International (CRIN) is one of the leading private sector fertilizer producers in the country with significant presence in South India. They are one of the leading producers of NPK and SSP grade fertilizers. CRIN’s total revenues declined by 5% YoY and grew by 43% QoQ to Rs.4,611cr in Q2FY21 with N-P-K fertilizer volumes declining on a YoY basis.The share of unique-grade fertilizer volume increased from 39% in Q2FY20 to 45% in Q2FY21, with EBITDA margins expanding 360bps YoY to 18.4%. The crop protection business saw a 25% YoY growth to Rs.637cr in revenues on the back of strong demand in both domestic and international markets.

Outlook

We expect increasing share of unique-grade fertilizers and crop protection products to aid profit growth in the long term. We downgrade our rating from “Buy” to “Accumulate” based on 17x FY22E EPS and a target price of Rs.837, as we feel that the current valuations have factored in these assumptions.

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