Coromandel International | Q3FY15 Result/Concall Update | In-line performance; Maintain HOLD with TP of Rs.353 :: IndiaNivesh

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Coromandel International: In-line results :: Kotak Sec, report

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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).


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Coromandel International - Inline Quarter, Optimistic Outlook; Result Update Q3FY15 :: Edelweiss

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Worst is over Coromandel International :: HDFC Securities

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Motilal Oswal Securities Reports on Coromandel

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Coromandel International Ltd.|Q2FY15 Result Update | Above expectation performance; Good times ahead: TP revised upward to Rs.353 | Maintain HOLD:: IndiaNivesh

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Coromandel International: Buy :: Business Line

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Technicals: Coromandel, Bharti Airtel, Hyderabad Ind, GSPL, Wipro, Voltas :: Business Line

 

Investment Focus: Coromandel International offers opportunity :: Business Line

The country’s leading complex fertiliser producer Coromandel International’s stock has corrected over 32 per cent in the last six months, even as Nifty gained 11 per cent during the same period. Slack fertiliser demand due to steep rise in farm gate prices, high inventory with the distributors and a weak monsoon impacted the company’s performance in FY13.

With the softening of key input prices and expectation of normal monsoon this year, volumes may rebound in 2013-14. At the current price of Rs 187, the stock trades at nine times 2013-14 earnings, making it a good investment opportunity.

The demand for complex fertilisers declined by over 25 per cent to nearly 16 million tonnes in 2012-13 thanks to steep rise in farm gate prices and adverse weather conditions. But the demand was much higher than the domestic production of around 12.5 million tonnes. As a result, a significant portion of the requirement was met through imports.

Despite favourable demand-supply economics, higher imports in anticipation of a strong demand led to excess supply in 2012-13. Also, sales push by fertiliser companies in the fourth quarter of 2011-12 fiscal led to pile up at the retailer end. However, the inventory at the dealer end is expected to moderate by the first half of the current fiscal. A nominal growth in demand may translate into healthy volumes for the company in 2013-14. The total inventory in Coromandel’s books declined from Rs 2,725 crore in September last year to Rs 1,478 crore by March this year.

The company has commissioned an additional complex fertiliser manufacturing unit at Kakinda in March. This will augment its capacity by 15 per cent to 36.35 lakh tonnes. It targets a gradual increase and expects to scale peak utilisation levels on the expanded capacity by 2014-15.

However, in order to de-risk the business and reduce dependency on government subsidies, the company has consciously scaled up its non-subsidy businesses. Coromandel’s acquisition of Sabero Organics and investment in single super phosphate fertiliser maker Liberty Phosphates (56 per cent stake) is a move in this direction. Liberty now commands 14 per cent share in the market. Coromandel also intends to acquire additional 26 per cent stake in Liberty through an open offer.

A visible improvement in the performance of its pesticide subsidiary Sabero Organics will benefit Coromandel’s performance beginning this fiscal. Sabero’s revenues grew at an impressive 32 per cent during the March quarter. Sabero posted Rs 3 crore profit last quarter, compared to a loss of Rs 11 crore during the same period last year.

Coromandel International Margins disappoint, upgrade to BUY:: Emkay

n Q3FY13 results disappointed on margins front. EBITDA
margins dipped to 5.3% (-390bps yoy & qoq), lowest since
implementation of NBS. PAT stood at Rs 684mn, -53% yoy
n Coro announced acquisition of Liberty Phosphate, leading
SSP player with ~1mn capacity & market share of 14%, at
deal price of Rs 241 / share valuing it at approx Rs 4bn
n Sharp drop in fertiliser volumes (-21% 9MFY13) and higher
inventories continues to affect profitability. However, we
believe volumes will pick up in FY14 on revival of demand
n With continued pressure on margins we are downgrading our
FY13/FY14 est by 27/20% to Rs 15.1/22.8 and target price to
Rs 320. However upgrade to BUY due to price correction
Margin dipped to 5.3% (-390bps yoy/qoq), lowest since NBS
Coromandel’s results disappointed on margins front. EBITDA margins dipped to 5.3%
(-390bps yoy & qoq), lowest since implementation of NBS. Though revenues at Rs
24.2bn, -5% yoy were ahead of est (of Rs 20.2bn) driven by higher volumes, EBITDA
came much lower at Rs 1.3bn, -45% yoy (est of Rs 1.9bn). Coromandel reported PAT at
Rs 684mn, -53% yoy lower than est of Rs 1bn.
Acquisition of Liberty Phosphate to strengthen its position in SSP
Coromandel has announced acquisition of Liberty Phospate, a leading SSP player with
capacity of 826,000 mtpa of SSP, 165,000 mtpa of NPK. Liberty is a leading SSP player
domestically with an established brand & strong distribution network with a market share
of 14% domestically. At acquisition price of Rs 241 / share (13% premium to closing
price of 24th Jan’13) valuing it at approx Rs 4bn, the deal is valued at EV/EBITDA of
4.2x, EV/Sales of 0.8x & P/E of 6.5x based on FY12 earnings. We believe valuations
are reasonable and it will strengthen Coromandel’s position in SSP.
Sluggish demand and higher inventory continues to affect margins
Sharp drop in complex fertiliser demand (industry vols down by ~21% ytd) and higher
inventory level in the system are putting pressure on margins and working capital.
Coromandel also witnessed 28% drop in sales volumes. However, we expect demand to
pick up from next year which is likely to boost company’s earnings.
Downgrade FY13/FY14 earnings, upgrade to BUY on sharp correction
On back of margin pressure and poor results, we have downgraded our FY13/FY14 est
by 27/20% to Rs 15.1/22.8. These est do not include consolidation of Liberty Phosphate.
Subsequently we have also revised our target price from Rs 340 to Rs 320 (14xFY14E)
and upgrade the stock to BUY from Accumulate on sharp correction in the stock price.
We expect softening in raw material prices and rebound in consumption will be key
driving factor for earnings growth.

Coromandel International - Sowing seeds of rich harvest; visit note; Buy :: Edelweiss PDF link

Coromandel International (CRIN IN, INR 296, Buy)

We recently met the Coromandel International (Coromandel) management. While fertilizer volume during FY13 is likely to be subdued on account of delayed monsoon and excessive inventory in the system, however non subsidy business is gaining momentum. Commissioning of new fertilizer and TIFERT facility in November 2012, Sabero’s turnaround and strong growth in non-subsidy business will be key growth drivers during FY14. We maintain ‘BUY’ with target price of INR383.

Coromandel International Ltd: Nutrients for growth seeded BUY: report by KRChoksey

Strong demand environment for augmented capacities: India is the second largest consumer of fertilizer in the world next to China. Fertilizer consumption has outpaced food grain production in the country over FY03-12. India’s per hectare fertilizer consumption at 141 kg for FY12 is lower than developed and many developing countries. The domestic capacity and production had stagnated leading to increasing imports in a rising raw material costs scenario. However post NBS regime, we believe CIL is well prepared to cater to the increasing domestic demand with capacity expansion and raw material availability issues getting over during FY13.

TRACKING TECHNICALS - MTT BUY CALL ON COROMANDEL INTERNATIONAL

TRACKING TECHNICALS - MTT BUY CALL ON COROMANDEL INTERNATIONAL

SCRIP NAME : COROMANDEL INTERNATIONAL            SECTOR :     FERTLIZERS              Date : 7th SEPTEMBER , 2012

CURRENT TREND : BULLISH               Time Horizon :  0 - 6 Months

Buy in the Range of  Rs.280 - Rs.294          Stop loss :Rs.245  (ON CLOSING BASIS )

TARGET: Rs.370

COROMANDEL INTL Rs.293 : COROMANDEL INTERNATIONAL has given a triangle breakout on weekly and monthly charts. The stock has given a throwback after which it has taken support at around 280 levels. On the daily charts it has formed a Pole and Pennant formation which is a very bullish pattern. We expect the stock to cross the all time high of Rs.361 very soon . Any move above Rs.361 would be a triple top resistance breakout and any move above the resistance of Rs.361 would take the stock to a target of Rs.425 - Rs.450 is also possible in the long term.

Thanks & Regards

Coromandel International: BUY: Business Line,

 

It is an opportune time for investors with a one-to-two year perspective to invest in the country’s second largest complex fertiliser producer, Coromandel International. The 17 per cent fall in the stock price in the last one year, despite strong fundamentals and robust outlook, make the stock a good investment idea. At the current price of Rs 260, the stock trades at an attractive 9.4 times the company’s 2013-14 earnings.

Coromandel International Ltd Q4FY12 Result updates BY GEPL CAPITAL Pdf Link

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Coromandel International Ltd view report

Coromandel International :: Q3FY12–Strong topline growth; margins under pressure: GEPL

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Q3FY12–Strong topline growth; margins under pressure; immediate term
challenges lurk
• Coromandel International (COIL) reported a 25% Y-o-Y growth in net sales to  `25.5 bn during
Q3FY12 from  `20.4 bn in Q3FY11. This includes subsidy income worth  `115.5 mn recognized
during Q3FY12 against `109.8 mn recognized during Q3FY11. Overall, the topline growth was in
line with street estimates.
• EBITDA growth was relatively flat at `2.5 bn in Q3FY12 against `2.4 bn in Q3FY11, growth of 4%
Y-o-Y. This was due to 27% Y-o-Y increase in  raw material costs and 31% increase in other
expenses. Other income includes loss of  `426.7 mn during Q3FY12 on sale of Government of
India Special Bonds. Consequently, EBITDA margin showed decline of 186 bps to 9.6% in Q3FY12.
• Reported net profit was  `1.3 bn for Q3FY12 against  `1.5  bn  in  Q3FY11,  a  drop  of  13%.  This
number includes `355.3 mn as non-compete fee paid to promoters of Sabero Organics Gujrat.
Adjusting for this fee, net profit was `1.7 bn for Q3FY12, a growth of 10% Y-o-Y.
Result Highlights
Sales impacted due to lower acreages
Acreages of several crops were affected during the quarter due to erratic rainfall, lower yields and
adverse conditions in major states of A.P. and Maharashtra. This had an impact on farmer
sentiment, thereby affecting sale of fertilisers. With respect to consumption volumes during the
quarter, Urea declined 1.8% Y-o-Y; Diammonium Phosphate (DAP) declined 12% Y-o-Y; Muriate of
Potash (MoP) showed growth of 6.3% Y-o-Y. Overall, the consumption was lower than last year.
Inventory pile up could be a matter of concern
COIL has inventory of 3 lac tons of DAP and MoP. Across the industry as well, inventory has gone up
to 3-3.5 mn Tons against the usual 1-1.2 mn Tons. This inventory pile up could pull down prices of
these items. Since COIL derives considerable amount  of  its  sales  from  DAP  and  MoP,  it  could  put
margins under pressure.
All eyes on subsidy amount to be announced by the government
The management stated during the concall that government could mull reducing fertiliser subsidy
to improve its fiscal position and also since global fertiliser prices had begun to move southwards.
Although urea decontrol still remains a distant dream, the subsidy announcement would have
important repercussions for the industry as a whole.
Valuation & Viewpoint
At the CMP of `274, COIL is trading at 9x its FY13E consensus earnings estimate. The stock has had
a good run over the past year rising 12% against a 12% decline for the SENSEX; thereby it is richly
valued currently. Factors such as inventory pile up and Sabero acquisition is expected to strain
margins in the coming quarters. Hence, we advise investors to watch  out for these near-term
triggers before approaching the stock.

Coromandel International:: Proxy complex fertiliser play - Downgrade to Hold:: Emkay

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¾ Coromandel being proxy to complex fertiliser is likely to
witness challenges due to pressure on complex fertiliser
demand and may see margin pressure
¾ Non subsidy business (agrochemicals, specialty fertilisers,
retail etc) which contributes 14% to revenues and 27% to
profits to also see margin pressure with slowdown in growth
¾ However, synergy from Sabero acquisition & TIFERT
commissioning in Q1FY13 remain future growth drivers
¾ Reduce FY12/13 est by 14.3% / 23.7% to Rs 22.6 / 24.7,
respectively and downgrade the stock from BUY to HOLD
with revised price target of Rs 286
Coromandel being proxy to complex fertiliser may witness pressure on
volume growth and margins
Coromandel Int’l is a leading player in the decontrolled fertilizer space with installed
capacity of 2.3mn mt of NPK (market share of 23%) & 0.8mn mt of DAP (market share
of 6%). Growing demand for complex fertiliser with farmers’ increasing awareness of
complex fertilizers has enabled the company to record topline CAGR of 25% and PAT
CAGR of 17% over FY08-11. However moderation in demand growth may hamper
complex fertilisers offtake and can put pressure on margins in near future due to
increased competition to maintain market share.
Coromandel’s non-subsidy business (which includes agrochemicals, retailing etc&
contributed ~14% to revenues and ~27% to EBITDA in FY11) with domestic market
focus might as well be impacted as farmers reduce their consumption of agri inputs.
However, synergies from Sabero Organics & TIFERT commissioning to
facilitate growth
Acquisition of Sabero Organics, a leading agrochemical player in technicals
manufacturing, should facilitate growth for Coromandel’s agro chemicals business.
Improved capacity utilization from 30-35% at present and integration of Sabero’s
diversified product portfolio of active ingredients (AI’s) with Coromandel’s strong
distribution network will help the company to support revenues, though the contribution
will remain marginal in percentage terms. Coromandel’s joint venture - TIFERT to
produce phos acid is expected to be commissioned by Q1FY13 and will increase
availability of phosphoric acid for Coromandel’s plants enabling the company to
increase the production of decontrolled fertilizers.
Reduce estimates and target price, Downgrade from BUY to HOLD
Foreseeing the challenges in near term on company’s earnings, we have reduced our
EPS estimates by 14%/24% to Rs 22.6/24.7 for FY12/13 respectively. Coromandel has
witnessed re-rating in multiples (post the introduction of NBS in April’10) with its PE
multiple expanding to 13x in FY11 compared to average of 5x during FY06-10.
However, in the current scenario, we have trimmed our target multiple to 11x from 13.5x
and revised our target price to Rs 286 (previous Rs 435) which also includes Rs 15 for
9% bonus debentures announced by the company and subsequently downgrade the
stock from BUY to HOLD. Strong balance sheet (cash positive) and RoE of 30% remain
key strengths of the company.

Coromandel International: Riding the reform wave; Buy :: Deutsche Bank

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Robust volume growth to drive EPS CAGR of 15% over FY11-14E
We initiate coverage on CIL with a Buy rating and target price of INR340, implying
13% upside potential. Including a bonus debenture of INR15, our target price
implies 18% total return potential. Our positive investment case is premised on 1)
robust volume growth in complex fertilisers driven by capacity expansion of 25%,
2) 186bps improvement in EBITDA margins over the next five years driven by
higher phosphoric acid availability, and 3) increasing share of margin-accretive nonsubsidised
businesses. We are 10%/ 5% above consensus on FY12/13 EPS.

Coromandel Intl – High margins, but volume uncertainty :: RBS

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In the concall, management indicated that DAP prices were hiked to Rs18200/T (+30%) in end
Sep, which should keep margins high for 2H. However, supply issues remain especially from
Tunisia. Too early to say if demand is impacted on higher price.

UBS:Coromandel International -Strong Q2 beat expectations; reiterate Buy

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UBS Investment Research
Coromandel International
S trong Q2 beat expectations; reiterate Buy
􀂄 Strong Q2 reaffirms robust business model
CIL’s pre-exceptional Q2 FY12 PAT was Rs2.63bn (+21% YoY), significantly
ahead of our and consensus forecasts. Q2 was tough in terms of weak demand (flat
to lower volume YoY), volatile FX and constraints in phosphoric acid supply.
Margins were aided by optimised procurement, product mix (more low-phosphoric
and traded products), its strong brand and favourable demand/supply. It should also
address recent concerns about low conversion margins for DAP. The non-subsidy
business continued to grow at a higher than average rate.
􀂄 Rs15/share special dividend; SSP plant announced in Punjab
CIL announced an Rs15/share bonus debenture (CIL celebrates its golden jubilee
today). This is 60% of our FY12E EPS and at the current share price implies a 5%
yield. It also reflects management’s confidence in cash flow and gives the
company flexibility to retain cash for expansion opportunities. CIL announced a
270,000t SSP project in Punjab, giving growth visibility beyond the next two
years.
􀂄 We maintain our positive view; the best agri play in India
We reiterate our view that CIL is emerging as a broad agri-inputs company and
remains well-placed to benefit from opportunities in the Indian agri space with its
strategy of increasing the mix of the non-subsidy business (higher margins/lower
regulation) from 28% to 50% of total earnings in two to three years time.
􀂄 Valuation: Buy rating with a price target of Rs416.00
We value CIL using a DCF-based methodology and our price target implies a
FY13E PE of 13.2x. We assume a WACC of 12.85%.