Lower subsidy rates & higher RM costs weaken margins

Company
11 Mar 2024
5 Min read 
  • Coromandel International reported weak operating performance in 3QFY24, with lower margins in the Nutrients and Allied business.
  •  The decline in margins was due to lower subsidy rates, higher raw material prices, and a weak cropping season.
  •  The crop protection business also remained subdued, with only a 4% YoY growth in EBIT.
  •  The company cut its FY24E earnings by 13% but maintained the earnings for FY25E/26E.
  •  Despite the challenges in the fertilizer business, the crop protection segment is expected to improve from 1QFY25.
  •  The company is focusing on increasing penetration in existing markets, debottlenecking to raise capacity, and lowering raw material costs.
  •  The valuation remains attractive, and the recommendation is to buy the stock.
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