EUR 120.00 For Business Accounts Only

MOSL: Morning India (12/May/20): 1. Coromandel Intl. (Fertilizer demand for kharif crop to remain stable); 2. India Strategy (Nifty’s sectoral representation: Big changes in hierarchy); 3. Godrej Agrovet (Bette

Morning India (12/May/20):

Today’s top research Idea
Coromandel Intl.: Fertilizer demand for kharif crop to remain stable
** Although overall volume declined 8% YoY in FY20 for Coromandel (CRIN), manufacturing volume came in higher (9% YoY), whereas trading volume declined (48% YoY); leading to EBITDA growth of 16% in FY20; this was despite revenue de-growth of 3%.

** EBITDA/MT for the manufacturing segment improved 24% YoY to INR3,500/MT in FY20, owing to decline in phos acid and ammonia prices; moreover, CRIN commenced operations at its own phos aid plant, resulting in cost savings.

** CRIN's key markets are Andhra Pradesh (AP), Telangana, Maharashtra, Karnataka, West Bengal, and Odisha which account for 94% of CRIN's NPK/DAP volumes and 84% of its overall volumes. Key crops grown these regions include paddy, pulses, cotton, soybean, and maize which are likely to do better in the upcoming kharif as normal rainfall is expected and prices for few crops are firm which bodes well for the consumption of fertilizers.

** In FY21, we expect manufacturing volumes to grow 6% and manufacturing EBITDA/MT of INR3,500/MT. We have ascribed a 17x PE multiple and arrived at TP of INR738. Maintain Buy.

Piping hot news
Finance Ministry releases Rs 6,195 crore to 14 states
The government released Rs 6,195.08 crore to 14 states as the second equated monthly installment of the Post Devolution Revenue Deficit Grant on Monday. "This would provide them additional resources during the Corona crisis," the finance ministry said in a statement Monday.