MOSL: COROMANDEL INTERNATIONAL (Buy)-Well on track for a healthy season
COROMANDEL INTERNATIONAL: Well on track for a healthy season; Expect 7% volume growth in FY19
(CRIN IN, Mkt Cap USD1.6b, CMP INR400, TP INR557, 39% Upside, Buy)
- On track to achieve full-year volume estimate: CRIN's volumes declined 7.1% YoY in 1QFY19. However, revenue grew 11.8% YoY, primarily on account of multiple price hikes taken over the past few months (Di Ammonium Phosphate (DAP) price increased ~25% to INR26,600/MT). Moreover, the Ministry of Fertilizers' data reveal a strong traction in 2QFY19 volumes so far. Sales volume for July and August stood at over 1.2m MT, which is ~81% of our volume estimate for 2QFY19.
- So far in 2QFY19, the company has achieved 99% of the volume estimate for urea, 86% for DAP, 80% for NPK and 74% for single super phosphate (SSP). The only disappointment comes from MOP, where CRIN has clocked only 17% of our estimated volumes. However, given the relatively low volume mix of MOP, we believe its sluggishness is unlikely to hamper the overall growth estimates.
- We expect the strong acreage trend in key crops to continue aiding growth. Furthermore, good rainfall in key states of Andhra Pradesh, Telangana, Karnataka, Maharashtra and Odisha also provides comfort. We expect overall volume growth of 7% and revenue growth of 16.8% in FY19.
Coromandel International Limited is engaged in the manufacture and trading of farm inputs consisting of fertilizers, crop protection, specialty nutrients and organic compost. The Company's business divisions include Fertilizers, Specialty Nutrients, Crop Protection and Retail. It offers various products in fertilizer segment, including Nitrogen, Phosphatic and Potassic in various grades. Its specialty nutrients consist of water soluble fertilizer, sulfur products, micro nutrients and organic manure. Its crop protection products consist of insecticides, fungicides and herbicides. Its retail outlets operate as Mana Gromor Centers. It manufactures a range of fertilizers and markets over 3.2 million tons. It operates a network of over 800 rural retail outlets under its retail business across Andhra Pradesh, Telangana and Karnataka. It has manufacturing facilities in Andhra Pradesh, Tamil Nadu, Karnataka, Maharashtra, Madhya Pradesh, Uttar Pradesh, Rajasthan, Gujarat, and Jammu and Kashmir.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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