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Coromandel 2Q results were higher than ours and consensus estimates, adjusted for one off
items in both quarters. Adjusted revenues grew 6% yoy to Rs27.24b, EBITDA grew 13% to
Rs3.8b and net income grew 17% yoy to Rs2.5b (vs consensus of Rs2.1b). More details on
analysts call on Thursday, 20 October
One offs distort reported numbers in both quarters
2QFY11 included receipt of prior period subsidy of Rs1.97b, while 2QFY12 has impact on
sale of fertilizer bonds (net addition of Rs262.2). Thus, reported revenues were up only1%
yoy and net income down 20% to Rs2788m.
Fertilizer volumes declined around 8%yoy to 940,000 tonnes with traded fertilizer volume
down 24%yoy and manufactured fertilizer volume down 4%. Thus, adjusted revenue growth
was 6%yoy. Lower volume of traded fertilizer had beneficial impact on margins with gross
margins up from 22% to 24% and EBITDA margins up from 13% to 13.8%.
New plant announced for SSP, foray into North
Coromandel announced setting up of a new 800 tonnes per day (tpd) ie, 300,000 tonnes per
annum plant for Single Super Phosphate (SSP) and a 400 tpd granulation unit in Punjab. This
will be company’s first unit in North India and is an expression of its intent to expand
distribution reach beyond South – a positive step, in our view.
Bonus debentures- a sweetener with likely NPV yield of 4%
Coromandel also announced bonus debentures of Rs15/- each for every share, and coupon
rate of not less than 9% per annum. We calculate an NPV of Rs14/- for the debentures,
assuming tenure of 3 years, coupon of 9% p.a. and discount rate of 12%; implying yield of
around 4% on current price.
Retain Buy; visibility on volume growth will be key catalyst
We retain Buy with price target of Rs365. We believe more clarity on volume growth (through
Tunisian JV) or on Sabero acquisition will be key catalysts for the stock
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Coromandel 2Q results were higher than ours and consensus estimates, adjusted for one off
items in both quarters. Adjusted revenues grew 6% yoy to Rs27.24b, EBITDA grew 13% to
Rs3.8b and net income grew 17% yoy to Rs2.5b (vs consensus of Rs2.1b). More details on
analysts call on Thursday, 20 October
One offs distort reported numbers in both quarters
2QFY11 included receipt of prior period subsidy of Rs1.97b, while 2QFY12 has impact on
sale of fertilizer bonds (net addition of Rs262.2). Thus, reported revenues were up only1%
yoy and net income down 20% to Rs2788m.
Fertilizer volumes declined around 8%yoy to 940,000 tonnes with traded fertilizer volume
down 24%yoy and manufactured fertilizer volume down 4%. Thus, adjusted revenue growth
was 6%yoy. Lower volume of traded fertilizer had beneficial impact on margins with gross
margins up from 22% to 24% and EBITDA margins up from 13% to 13.8%.
New plant announced for SSP, foray into North
Coromandel announced setting up of a new 800 tonnes per day (tpd) ie, 300,000 tonnes per
annum plant for Single Super Phosphate (SSP) and a 400 tpd granulation unit in Punjab. This
will be company’s first unit in North India and is an expression of its intent to expand
distribution reach beyond South – a positive step, in our view.
Bonus debentures- a sweetener with likely NPV yield of 4%
Coromandel also announced bonus debentures of Rs15/- each for every share, and coupon
rate of not less than 9% per annum. We calculate an NPV of Rs14/- for the debentures,
assuming tenure of 3 years, coupon of 9% p.a. and discount rate of 12%; implying yield of
around 4% on current price.
Retain Buy; visibility on volume growth will be key catalyst
We retain Buy with price target of Rs365. We believe more clarity on volume growth (through
Tunisian JV) or on Sabero acquisition will be key catalysts for the stock
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