COROMANDEL - Coromandel International Limited Share Price

During the recent earnings call for Q4 FY25, management provided an optimistic outlook for Coromandel International Limited, emphasizing a robust agricultural environment bolstered by favorable monsoon conditions and increased reservoir levels. Key forward-looking points discussed include:

1. Agricultural Growth Projections: Food grain production for FY24-25 is projected at 331 million tons, reflecting a 5% increase over the previous year. The gross value added in agriculture is anticipated to grow by 4.6%, up from 2.7% last year.

2. Weather Forecasts: Agencies forecast normal to above-normal monsoons for the upcoming kharif season, with summer sowing figures already showing an increase, standing at 7 hectares compared to 6 hectares last year.

3. Government Support: The Andhra state has allocated Rs. 18,000 crores for irrigation projects, while various direct income schemes like PM Kisan and Telangana's Rythu Bharosa are projected to enhance farmers' incomes.

4. Nutrient-Based Subsidy Rates: For FY25-26, there has been a 42% increase in the price of phosphorus fertilizers in line with global market trends, alongside a one-time special package for DAP of Rs. 3,500 per metric ton.

5. Production Data: Coromandel achieved record phosphatic fertilizer sales, marking a 13% volume increase and improved its market share from 15% to 18%. The SSP segment saw an 18% rise in sales, while drone spraying initiatives have expanded coverage to 2.2 lakh acres.

6. Forward Integration: Coromandel has made significant investments into backward integration projects, with major facilities expected to come online in the current fiscal year, enhancing operational efficiency.

7. Financial Performance: The consolidated total income for FY25 was Rs. 24,444 crores, a 10% increase over the previous year. The management announced a final dividend of Rs. 9 per share and the EBITDA margin guidance remains at approximately Rs. 4,500 to Rs. 5,000 per ton.

These insights indicate a strategic alignment towards driving growth through operational improvements, market expansion, and enhanced product offerings in key agricultural segments.

Q&A Section Summary from Coromandel's Q4 FY "˜25 Earnings Call

1. Question: "On the NACL, how do we plan to turn around NACL? And by when can we see NACL aligning with our crop protection division margin?" Answer: We're waiting for regulatory approvals in 2-3 months to reassess opportunities. We'll focus on restoring margins through efficiencies and increased production. Current funding supports their operations, and some product prices are improving, which will assist in aligning margins.

2. Question: "Do we see the Rs. 1,000 crores investment plan for crop protection being trimmed post-acquisition?" Answer: It's not trimmed but moderated, as we can leverage existing capacities and retrofit them. This allows faster market entry while evaluating new investments in specialty chemicals and CDMO opportunities.

3. Question: "Annually, how much fertilizers do we plan to import from Ma'aden?" Answer: Our current contract is for 300,000 tons annually, potentially increasing to 0.5 million tons, enhancing DAP imports to optimize NPK production.

4. Question: "What is the CAPEX plan for this year on various projects?" Answer: Projects are progressing well, with 45% completion in phosphoric acid and sulfuric acid plants expected by FY26. We aim to expand capacities and undertake sustainable CAPEX, with possible inorganic opportunities.

5. Question: "What's the volumetric growth expected for crop protection, and how do we view margins with price deflation?" Answer: We anticipate high double-digit growth across segments. New product introductions are expected to enhance margins, supported by our product pipeline.

6. Question: "On nano DAP, how is traction, and what is the expected market size in 3-4 years?" Answer: We sold 26 lakh bottles with an 80-90% liquidation rate, and we expect to replace 2 million tons of DAP in 2-3 years. International interest for exports is growing.

7. Question: "What is the current financial status of the retail business?" Answer: Over 95% of stores are profitable, with a breakeven period now reduced to six months. We're leveraging negative working capital effectively and plan to triple our retail footprint.

8. Question: "What are our targets for NACL after the acquisition?" Answer: We aim to restore capacity utilization and profitability, targeting margins similar to historical figures in the coming three years.

9. Question: "Can you provide insights into the sulfur price impacts and their future trajectory?" Answer: Sulfur prices peaked but should stabilize due to global supply dynamics. Overall, we expect commodity prices to soften, which should help maintain margins.

10. Question: "What's your view on achieving a 40% increase in EBITDA/ton in the fertilizer business?" Answer: The target remains viable; we expect the commissioned facilities to significantly contribute, particularly in FY27.