Prabhudas Lilladher's research report on Coromandel International
CRIN reported mixed results with topline flat @ Rs28.5bn YoY (PLe 8% degrowth), but EBITDA declined 33% YoY @ Rs2.6bn (PLe Rs 3.6 bn) driven by RM cost inflation. The company became net cash due to robust cash generation led by healthy performance in FY21, higher inflow of subsidy (recd Rs50bn in FY) and lower working capital driven by 34-day decline in receivables. CP segment clocked healthy topline growth, but margins were under marginal stress due to pricing pressure from international geographies. The segment continues to be on structural growth trajectory driven by rich product pipeline, expanding geographical presence and focus on expanding registrations. In FY22, we believe higher raw material cost will continue to be a concern as CRIN (& industry) may take sharp price increase to defend margins, yet lower pending subsidies and surplus cash will eventually aid profit (due to lower interest cost and higher other income).
Outlook
We have increased our topline/APAT by 7%/3.9% for FY22E and 1%/0% FY23E driven by higher realisations, lower finance cost and higher other income. But we reduce our EBITDA estimates by 1%/1.5% for FY22E/FY23E, roll over to FY23E earnings and increase our TP to Rs700 (Previous 675) based on 15x FY23E EPS of Rs46.7. Maintain REDUCE.
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