Stocks

Broker's call: Coromandel International (Buy)

| Updated on July 25, 2019

Elara Capital

Coromandel International (Buy)

CMP: ₹384.3

Target: ₹511

Coromandel International reported revenue of ₹2,130 crore, down 16 per cent y-o-y on account of lower fertiliser sales and weak performance in the agrochemicals segment. Gross margin expanded by 130 bps y-o-y, due to softening of raw material prices in fertilisers. Ebitda declined 9 per cent y-o-y to ₹190 crore, with Ebitda margin expansion of 70 bps y-o-y to 9.2 per cent, which was in line with our estimates. Margin improvement was supported by forex gains (recognized in other expenses) and operational efficiency. Depreciation increased 19 per cent y-o-y to ₹30.5 crore while finance cost rose by 24 per cent y-o-y to ₹79.6 crore, due to an increase in borrowings on account of higher inventory and reclassification of leases under IND AS 116. Consequently, adjusted PAT declined by 31 per cent y-o-y to ₹62.5 crore.

Valuation: We cut our EPS by 9 per cent for FY20E and by 6 per cent for FY21E to factor in lower growth agrochemicals in Q1FY20. We reiterate ‘Buy’ with a revised target price of ₹511 from ₹543 based on 16x (unchanged) FY21E EPS of ₹32.0 (from ₹33.9).

Published on July 26, 2019

Follow us on Telegram, Facebook, Twitter, Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

This article is closed for comments.
Please Email the Editor