COROMANDEL INTERNATIONAL LTD Q1 FY 20 RESULTS REVIEW DT 29 07 20

COROMANDEL INTERNATIONAL LTD

Q1 FY 20 RESULTS REVIEW DT 29 07 20

MANAGEMENT                                         

M M Murugappan         Chairman                                       

V Ravichandran           Vice Chairman                                

Sameer Goel               Managing Director                          

RESULTS

Coromandel International (in Rs. Cr.)	Jun '20	Mar '20	Jun '19	YOY	QOQ	COMMENTS
Net Sales	3,213.23	2,869.32	2,130.74	50.8	11.99	EXCELLENT INCREASE
Interest	43.44	43.43	79.59	-45.42	0.02	REDUCED
P/L Before Tax	337.63	313.73	95.19	254.69	7.62	IMPRESSIVE YOY
Tax	89.61	79.96	32.61	174.79	12.07	INCREASED
Net Profit	248.02	233.77	62.58	296.32	6.1	YOY IMPRESSIVE
Net P/L After M.I & Associates	250.57	234.2	62.43	301.36	6.99	YOY IMPRESSIVE
Equity	29.32	29.3	29.26	0.21	0.07	Static
Reserves Excluding Revaluation Reserves	--	4,288.40	--			Very good
Basic EPS	8.55	8	2.13	301.41	6.88	Excellent growth
MP	784
PE	23
52 Wk L/H	336.5	828.55

                                                                                                               

Historical Prices                                      

       1 YR BEFOR Current Price     %Gain / Loss           

Open Price    396     807             103.79                       

       2 YR BEFORE                                       

Open Price    406.25   807         98.65                         

       3 YR BEFOR                                  

Open Price    435.1     807         85.47                         

       3 MNT BEF                                    

Open Price    551.3     807         46.38                         

Share Holding Pattern in (%) 

                                

Standalone    Jun-20   Mar-20   Dec-19   Sep-19                

Promoters     59.6       61.63     61.69     61.72                  

Pledged  0.01       0.01       0.01       0.01                    

FII/FPI   4.26       3.5  3.54       3.39                    

Total DII 26.5       25.63     24.49     24.3                    

Fin.Insts 0.03       0.02       0.05       0.06                    

Insurance Co 0.37       0.41       0.5  0.75                    

MF   16.38     15.75     14.63     14.35                  

Others DIIs   9.72       9.45       9.31       9.14                    

Others    9.65       9.23       10.29     10.59                  

Total      100.01   99.99     100.01   100              

SWOT ANALYSIS                                                               

Strengths (8)

·                                

• High TTM EPS Growth
• Good quarterly growth
• Growth in Quarterly Net Profit with increasing Profit Margin (YoY)
• Annual Net Profits improving for last 2 years
• FII / FPI or Institutions increasing their shareholding
• Growth in Operating Profit with increase in operating margins (YoY)
• Strong Momentum in price move

CHART                                                                

1 YEAR CHART INDICATES STEADY, GRADUAL UPTREND FROM SEP'19      

Valuation                                

Market Cap (Rs Cr.)    23,438.28                                       

P/E                             22.13                                      

Book Value (Rs)          149.72                              

Dividend (%)              1200                          

Industry P/E                9.92                           

EPS (TTM)                  36.13                         

P/C                             19.27           

Price/Book                  5.34                           

Face Value (RS)          1                               

·       NEWS :

    EID Parry sells stake in Coromandel International; share price slips 3%                                         

·       Healthy performance in challenging times                                              

i) Debt equity Ratio : 0.30 : 0.37                                      

II) DEBT SERVICE COVERAGE RATRIO (IN TIMES) 9.96 : 7.50                                          

III) Interest service coverage Ratio (in terms :9.96 : 7.50       

Highlights

- Strong growth in revenue and profits
- Strong demand led to volume uptick
- Healthy and timely monsoon boosted demand
- Backward integration aiding margins

It  has put up a strong show in Q1 despite a challenging environment.

The current turmoil impacted its performance in April. However, operations are now getting back to normal. With consistent revenue growth, a decent return on capital employed (around 23 per cent), a strong balance sheet, Coromandel is poised for growth in the long term. We would advise to accumulate on correction for the longer run.

Company profile

Coromandel deals in manufacturing and trading of fertilisers, crop protection chemicals, specialty nutrients and organic compost. It offers various products in the fertiliser segment, including nitrogen, phosphatic and potassic (NPK) variants in various grades.

Its specialty nutrients consist of water soluble fertilisers, sulphur products, micro nutrients and organic manure while crop protection covers insecticides, fungicides and herbicides.

The crop protection segment reported a 54 per cent YoY growth both in domestic and export markets.

The recently installed phosphatic acid plant led to a strong 75 per cent uptick in phosphatic acid sales.

The manufacturing and DAP volumes also saw a healthy growth.

Agriculture situation

The forecast of a healthy monsoon and the timely onset of rains will benefit the company.

The locust attack on standing crops also led to higher demand for pesticides. Following the scarcity of labour because of the nationwide lockdown, many farmers had opted for direct sowing in place of transplantation, leading to a higher use of agrochemicals. Reduced manual weeding is likely to boost the use of chemicals in the coming weeks.

Backward integration

In October 2019, Coromandel commenced operations at its phosphoric acid plant. The backward integration would help the company to control costs in the coming months.

Raw material situation

Some initial hiccups were there after the lockdown was imposed. But, the raw material supply has now become smooth.

Impact of the proposal to ban certain insecticides

The central government had released a draft proposal to ban 27 insecticides, many of which are products that Coromandel deals with (four major ones — Mancozeb, Malathion, Acephate and Monocrotophos).

If the ban is implemented, it could adversely impact the company. However, industry associations are strongly opposing this ban and, we believe, several changes will be incorporated before the draft is finalised.

The proposal covers only domestic sales, while exports will remain exempted.

Apart from Monocrotophos, no other product is a red triangle category product. 

Outlook

The company has been strategically launching high-margin products, which are getting a decent response and gaining traction. An improved product mix is a positive for the margins in the longer term.

Distribution and production have started normalising after some disruption in April.

As the company is always introducing new petsicides, insecticides etc to help the farmers, and the farmers have strong belief in the brand of Coromandel, the company can be expected to benefit from these factors and progress well in future.