Prabhudas Lilladher's research report on Coromandel International
Coromandel International (CRIN) reported revenue/EBITDA/PAT growth of 65%/42%/43% YoY respectively. Results were ahead of our and consensus estimates led by superior margins. Key highlights are 1) overall fertilizer sales volumes were up 12% YoY; 2) Crop protection posted flat YoY growth (+1% YoY); 3) derived EBITDA/tonne stood at +Rs6600 (1HFY23 +Rs6900 as against Rs5000/tonne in 1HFY22); 4) Market share (MS) stood flat at19.2% in 2QFY23 (for 1HFY23 at 16.2% as against 18.4% in same period last year); 5) Phos. acid contracted for 3QFY23 at USD1175/tonne down 31% QoQ; 6) Subsidy outstanding at Rs41.76bn as on 30th September'22 (up Rs24.7bn YoY, up Rs14.5bn QoQ). Citing better margins for 1HFY23, management has revised upward their EBITDA/tonne guidance to +Rs5500/tonne for FY23 as against their earlier guidance of Rs4000-4500/tonne. However, softening of RM prices in turn would result into reduction in MRP/subsidy rates going forward in 2HFY23 in turn to weigh on the margins.
Outlook
We anticipate CRIN to report stable margins over the longer term backed by a) efficient sourcing of RM's; b) benefits of backward integration; c) rising share of unique grades; d) product innovation and capacity expansion in both the business; e) enhanced focus on branding of products both in nutrition and CP segment. Factoring in 1HFY23 performance, we increase our FY23 EPS estimates by 6%, while we keep our FY24/25 EPS estimates largely unchanged. Maintain 'BUY' with unchanged TP of INR1200 based on 18xFY25E EPS.
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