COROMANDEL - Coromandel International Limited Share Price

Management provided an optimistic outlook regarding the agricultural environment and company performance. Key highlights include:

1. Favorable Agricultural Conditions: As of now, the country has received 105% of the long-period average rainfall, with healthy reservoir levels rising to 61% compared to 38% last year, thus promising a favorable crop sowing season.

2. Crop Sowing Growth: Healthy crop acreage has increased by 4% this season, with specific growth in rice (13%) and coarse cereals (14%). Total crop sowing reached 71 million hectares, reflecting strong activity.

3. Government Initiatives: The government is supporting farm income through increased minimum support prices and direct income schemes. Notably, a new Dhan-Dhaanya Krishi Yojana scheme aims to improve farmer incomes in low-productivity districts.

4. Fertilizer Supply Assurance: The government has secured long-term DAP supplies (3.1 million tons), vital as India imports approximately 5-6 million tons annually. Overall DAP prices are expected to stabilize, given the supply from Middle Eastern sources, reducing reliance on China.

5. Production and Capacity Utilization: The company operated at full capacity (8.4 lakh tons) in Q1 FY '26, showing a 6% volume growth. The phosphoric acid segment surged by 23%, and production for DAP and NPK grew by 6%.

6. Expansion Plans: Coromandel is investing in additional capacity, including a granulation facility expected to add 7.5 lakh tons by FY '26-27 and a stake increase in its Senegal rock phosphate project from 53.8% to 71.5%.

7. Financial Performance: Consolidated total income surged to INR 7,126 crores (up 49%), with EBITDA rising to INR 782 crores (up 55%). They received INR 1,300 crores in subsidies from the government, signaling strong liquidity and support.

8. Market Share and Product Innovations: The company's market share in phosphatic fertilizers improved to 18%, while the specialty nutrient business saw a volume growth of 12%. New product launches totaled 10 in Q1, indicating a robust focus on innovation.

Overall, management is confident about sustaining growth in revenue and profitability while strategically positioning itself for future opportunities in the agricultural sector.

Major Questions and Answers from the Earnings Call Transcript:

1. Question: Sir, your view on what could be the NBS subsidy for H2, not the number, but directionally, how it could be?
   Answer: Logically, subsidy should go up given the rising raw material prices.

2. Question: On BMCC, what is the current output? How much do we plan to scale it up to?
   Answer: If all goes well this year, we expect to reach 300,000 to 400,000 tons per annum. In the next two years, we aim to double that capacity without significant investments.

3. Question: Do we see any major supply that could come from global players in the DAP market in the next 6 to 9 months?
   Answer: With capacity expansion in the Middle East, we are confident that we will see increased volumes that will mitigate the current demand-supply mismatch created by reduced imports from China.

4. Question: Can you share updated thoughts on manufactured margins, which were around INR 5,000 per ton?
   Answer: Our normative EBITDA of INR 5,000 per ton is expected to sustain this year. We're managing well despite some challenges due to volatile commodity prices.

5. Question: What is the current conversion rate of rock to acid?
   Answer: Roughly, 3.5 to 4.25 tons of rock are needed per ton of acid, depending on the grade used. This ensures quality output without compromising efficiency.

6. Question: What strategic plans are in place for the Crop Protection segment after the NACL acquisition?
   Answer: We plan to expand our product portfolio through licensing unique molecules and increasing our branded formulation business, leveraging NACL's strengths.

7. Question: Regarding geographical expansion, how competitive will we be in the central and northern states?
   Answer: The movement of NPKs to northern markets will be competitive due to government-subsidized railway freight. Currently, our focus remains on growing brand presence in those areas.

8. Question: When can we expect the NACL acquisition to become profitable?
   Answer: I cannot comment on profitability timelines now, as they will be published in NACL's results post-acquisition completion.

These answers encapsulate the major concerns and strategies discussed in the earnings call, reflecting a positive outlook amidst challenges in the agricultural and fertilizer sectors.