Coromandel (Buy, PT Rs 416, 32% upside)UBS: India Mid-Caps TOP PICKS - September 2011

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• Best play on agri inputs in India – robust business model
- Lowest cost manufacturer of phosphatic and complex
fertilizers in India with flexible manufacturing for any
combination at short notice
- Raw material security – 14% stake in FOSKOR and 15%
stake in TIFERT Tunisia
- First-mover advantage in specialty nutrients and organic
compost, and 423 rural retail stores for distribution
• Increased share of non-subsidy businesses (higher margins
and lesser regulatory risks) from 30% of contribution to
50% in 3-4 years underpins management strategy
• FY11-13E - 33% EPS CAGR, ROEs of 29-34%, net-cash
balance sheet. Differential in growth / ROEs (historical and
forecast) and a more robust business model = CIL premium
valuation to peers
• Market Cap US$2.2bn. Shareholding - Promoter 64%
• Valuation: DCF using UBS’s VCAM tool (assume WACC at
12.85% and terminal sales growth of 1.7%). Implied FY12E
EV/EBITDA 8.1x and PE of 13.2x



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