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In-line results. CRIN’s 3QFY15 results were in line with estimates. The company is poised to do better in the coming year (assuming a normal monsoon) as (1) pipeline inventories in complex fertilizers have come down to normalized levels, implying that sales volumes could be healthy next year, and (2) the agri-chemicals business could do better from the low base of this year (because of subdued demand conditions on account of a poor monsoon). However, in our view, most of the positives are discounted in the current price. We retain SELL rating (TP unchanged at `210).
�� India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details ��
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Results meet expectations CRIN reported 3QFY15 consolidated sales at `29.6 bn (+7% yoy). Manufactured complex fertilizer volumes were down 14% yoy, impacted by subdued farmer sentiments on account of poor kharif and low crop prices versus last year. In the agri-chemicals segment, while export sales were up 40% yoy, sales in the domestic market were subdued. The company reported consolidated 3QFY15 EBITDA at `2.25 bn (-2% yoy). As per our calculations, the company made an EBITDA of ~`2,000 per ton in the fertilizer segment. Rationalization of working capital led by lower channel receivables led to lower interest cost (`446 mn versus `601 mn in 3QFY14) in 3QFY15, even as subsidy payments have been a bit delayed versus last year. Lower (versus estimates) interest costs enabled the company to report 3QFY15 consolidated PAT at `1.2 bn, which was a bit higher versus our estimates. Poised to do better next year in case monsoon does not disappoint As per the management, pipeline inventories in complex fertilizers have come down to ~2 mn tons, after starting at 4 mn tons in FY2015. Channel inventory being at normalized levels presents a good opportunity to the company to push volumes in FY2016. Also, in FY2015 the non-subsidy business of the company was subdued due to (1) flattish sales of agri-chemicals in the domestic market and (2) subdued sales volumes/realizations for gypsum on account of weak demand for cement in Andhra Pradesh. In our view, in case monsoon does not disappoint in FY2016, the company is poised for a better year versus the depressed base of FY2015. Positives are discounted in the current price; retain SELL In our view, most of the positives are discounted in the current price. We have cut our estimates. We retain SELL rating with an unchanged target price of `210 (at 12X December 2016E EPS). We remain negative on the stock, as in our view the return profile of the business is suboptimal. As per our analysis, the company can generate best-case post-tax RoCE (including acceptances in capital deployed) of only 13-15% in its business and can generate average post-tax RoCE in the range of 10-12% over a cycle. Valuations of the company at 16X December 2016E EPS is expensive in that context.
LINK
http://www.kotaksecurities.com/pdf/indiadaily/indiadaily28012015po.pdf
In-line results. CRIN’s 3QFY15 results were in line with estimates. The company is poised to do better in the coming year (assuming a normal monsoon) as (1) pipeline inventories in complex fertilizers have come down to normalized levels, implying that sales volumes could be healthy next year, and (2) the agri-chemicals business could do better from the low base of this year (because of subdued demand conditions on account of a poor monsoon). However, in our view, most of the positives are discounted in the current price. We retain SELL rating (TP unchanged at `210).
�� India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details ��
��
Results meet expectations CRIN reported 3QFY15 consolidated sales at `29.6 bn (+7% yoy). Manufactured complex fertilizer volumes were down 14% yoy, impacted by subdued farmer sentiments on account of poor kharif and low crop prices versus last year. In the agri-chemicals segment, while export sales were up 40% yoy, sales in the domestic market were subdued. The company reported consolidated 3QFY15 EBITDA at `2.25 bn (-2% yoy). As per our calculations, the company made an EBITDA of ~`2,000 per ton in the fertilizer segment. Rationalization of working capital led by lower channel receivables led to lower interest cost (`446 mn versus `601 mn in 3QFY14) in 3QFY15, even as subsidy payments have been a bit delayed versus last year. Lower (versus estimates) interest costs enabled the company to report 3QFY15 consolidated PAT at `1.2 bn, which was a bit higher versus our estimates. Poised to do better next year in case monsoon does not disappoint As per the management, pipeline inventories in complex fertilizers have come down to ~2 mn tons, after starting at 4 mn tons in FY2015. Channel inventory being at normalized levels presents a good opportunity to the company to push volumes in FY2016. Also, in FY2015 the non-subsidy business of the company was subdued due to (1) flattish sales of agri-chemicals in the domestic market and (2) subdued sales volumes/realizations for gypsum on account of weak demand for cement in Andhra Pradesh. In our view, in case monsoon does not disappoint in FY2016, the company is poised for a better year versus the depressed base of FY2015. Positives are discounted in the current price; retain SELL In our view, most of the positives are discounted in the current price. We have cut our estimates. We retain SELL rating with an unchanged target price of `210 (at 12X December 2016E EPS). We remain negative on the stock, as in our view the return profile of the business is suboptimal. As per our analysis, the company can generate best-case post-tax RoCE (including acceptances in capital deployed) of only 13-15% in its business and can generate average post-tax RoCE in the range of 10-12% over a cycle. Valuations of the company at 16X December 2016E EPS is expensive in that context.
LINK
http://www.kotaksecurities.com/pdf/indiadaily/indiadaily28012015po.pdf
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