Sharekhan has given Buy recommendation for Coromandel International with a target price of Rs. 1070 in its research report issued on Jun 24, 2021
Sharekhan’s research report on Coromandel International
Coromandel International’s management indicated that after a 140% hike in fertiliser subsidy for DAP, margins of fertiliser business have reverted to Rs. 4,000/tonne. Above normal monsoon bodes well for higher fertiliser demand in the upcoming Kharif season. FY22 capex of Rs. 500-600 crore lined up for capacity expansion and backward integration. Evaporator plant at Visakhapatnam to get completed by August 2021 and drive cost-savings as it would improve availability of concentrated phosphoric acid at Kakinada plant. Strong balance sheet with cash of Rs. 2,000 crore would help company pursue inorganic growth opportunities, which could accelerate growth in the medium to long term.
We retain a Buy rating on stock with a revised PT of Rs. 1,070 as normalisation of fertiliser margin, good agronomics and strong growth in CPC business would drive a 15% PAT CAGR over FY21-24E with high RoE of 24%. Stock trades at 15x its FY23E EPS and 13.1x its FY24E EPS.