Equity Shares (m)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
12M Avg Val (INR M)
Free float (%)
64.5 / 1.0
260 / 146
28 April 2016
4QFY16 Results Update | Sector: Fertilizers
Financials & Valuations (INR b)
Coromandel’s overall revenue grew 1% YoY to INR30.2b (vs. our
estimate of INR28.7b) in 4QFY16. EBITDA grew 25% YoY to INR2b (vs. our
estimate of INR1.9b), while EBITDA margin expanded by 130bp YoY to 6.6% (vs.
our estimate of 8%). The subsidy:non-subsidy revenue mix stood at 86:14 for
4QFY16 (same as 4QFY15), while EBITDA mix was 64:36 (same as 4QFY15). For
FY16, the subsidy:non-subsidy revenue mix stood at 84:16, while EBITDA mix
was 64:36. The margin expansion was driven by a growth of 8% YoY in
manufactured phosphates. As a result, PAT grew 35% YoY to INR927m (vs. our
estimate of INR901m) in 4QFY16. Subsidy outstanding stood at INR20.2b which
is expected to be released by the government starting May 2016.
Fertilizer revenue growth to bounce back on normal monsoon:
Meteorological Department as well as Skymet have provided an encouraging
monsoon forecast for FY16 which will be a key positive for CRIN. Management
has highlighted that the industry currently has an inventory of 6m ton, with a
major portion lying in North India (4m). CRIN enjoys a stronghold in Southern
India, but it does not hold much inventory in the North (largely has imported
DAP) and hence, it holds overall less channel inventory. CRIN is geared up to
supply goods if demand increases sharply on account of a normal monsoon and
has sufficient inventory for 1QFY17.
Share gains in key markets continue:
The company’s all-India market share
stood at 14.4% in FY16 as against 16.2% in FY15. CRIN gained share in the
markets of Andhra Pradesh and Telangana where its share stood at 60% in FY16,
up from 59% in FY15. Management has highlighted that CRIN also gained
market share in Tamil Nadu (10%), West Bengal (12%), and Madhya Pradesh and
Chhattisgarh (14%), but lost market share in North India, Maharashtra and
Karnataka (due to its withdrawal from the co-marketing institutional business).
On the export front, the technical business driven by Mancozeb continued to
show encouraging traction, which partly offset the decline in the domestic
Valuation and view:
We expect 12% revenue CAGR and 160bp margin
expansion over FY16-18, translating into 41% PAT CAGR. We believe that CRIN
has significant operating and financial levers ahead. Maintain
with a TP of
INR260, 12x FY18E EPS.
Encouraging outlook driven by normal monsoon forecast
(Niket.Shah@MotilalOswal.com); +91 22 39825126
Investors are advised to refer through important disclosures made at the last page of the Research Report.
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.