Buy Chambal Fertilizers; target of Rs 360: Prabhudas Lilladher

Prabhudas Lilladher is bullish on Chambal Fertilizers and Chemicals has recommended buy rating on the stock with a target price of Rs 360 in its research report dated February 09, 2023.

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February 14, 2023 / 22:31 IST

26 Aug, 2025 12:21

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Prabhudas Lilladher's research report on Chambal Fertilizers and Chemicals

We trim our FY23/24/25E EPS estimates by 2%/3%/3% citing a) volatile raw material (RM) cost scenario b) inability to fully pass on inflated cost and c) expectation of reduced NBS subsidy (Nutrient based subsidy) announcement from government. In Q3, Chambal Fertilizers (CHMB) reported decent set of numbers with Revenue/ EBITDA/PAT growth of 75%/15%/-1% YoY. Revenues were in-line with estimates, however margins were lower due to a) high cost inventory; b) adverse forex and c) inadequate subsidy in Phosphatic (P&K) fertilizers. Going forward, we expect healthy subsidy disbursal from the Govt. to continue (9M’23 subsidy receipts of Rs156.9bn; Rs28.9bn in January’23) resulting in improved working capital and lower interest burden.

Outlook

Given delay in Technical Ammonium Nitrate (TAN) project by almost a year (likely to be commissioned in 1HFY26) and limited growth visibility in the existing business, we cut our target multiple from 10x to 9x (5 year high/low average 1 year forward 15x/3x/7x). Maintain ‘BUY’ with revised TP of Rs360 based on 9XFY25 EPS (earlier Rs410 based on 10XFY25 EPS).

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