COROMANDEL - Coromandel International Limited Share Price

Management's outlook for Coromandel International Limited suggests a cautiously optimistic view for the upcoming quarters. Despite encountering challenges such as higher raw material prices and a depreciated rupee, the company aims to maintain growth in its fertilizer production and crop protection segments.

Key forward-looking points include:

1. Fertilizer Production: The company achieved its highest-ever quarterly fertilizer production of 9.9 lakh tons, representing an 18% increase from the previous year. It aims to sustain production levels amid fluctuating raw material prices.

2. Subsidy Trends: The government's total subsidy outgo for the fiscal year may reach up to INR 1.86 lakh crores, with an allocation of INR 1.17 lakh crores for urea and INR 54,000 crores for phosphatic fertilizers for the 2026-27 fiscal year. The company feels the allocation is reasonably adequate.

3. NPK Product Shift: There is a positive shift towards NPK fertilizers, with its market share increasing from 50% to 60% over two years, positioning the company favorably amid the changing consumption landscape.

4. Crop Protection Growth: The Crop Protection segment anticipates improvements with favorable demand for technical molecules like Mancozeb, while the revenue for the segment saw a 24% growth, reaching INR 785 crores.

5. Expansion Projects: The backward integration projects for sulfuric and phosphoric acid are progressing well, with completion expected soon. Once operational, these initiatives could enhance value addition significantly.

6. Market Dynamics: The management expects a sustainable increase in exports, particularly to Europe post the India-EU FTA, which poses opportunities for agrochemicals and specialty fertilizers.

7. Financial Performance: For Q3, the total income stood at INR 8,863 crores, a 26% increase year-on-year, and net profit after tax was INR 488 crores. The company's EBITDA for the quarter was INR 805 crores, marking a solid growth trajectory.

Overall, Coromandel's strategic focus remains on achieving operational excellence, expanding market share, and enhancing long-term value creation while navigating the complex market dynamics.

Major Questions and Answers from the Q&A Section of the Earnings Call Transcript

1. Question: "Sir, first question is related to the Crop Protection business. Like for 9 months, if we see, we have clocked close to around 21% increase in the sales as compared to last 9 months of FY '25. So, if you can just share how much was the volume growth out of this 21% sales growth that we have achieved?"
   Answer: "For the Crop Protection segment, exports have grown by 32%, and domestic B2B institutions by 36%. However, domestic formulation for B2C saw only a 5% increase. Overall, volume and value growth have been aligned, and I can confirm that our volume growth is roughly similar to the sales increase."

2. Question: "The second part possibly could be the price increase or is it because of the launch of newer products... can you just share your views in terms of this improvement in margins?"
   Answer: "Yes, new products have contributed to margin improvement, particularly in our domestic formulation segment. However, rainfall impacted our expected growth. The growth we saw has primarily come from exports, driven by both volume increases and favorable pricing."

3. Question: "With the FTA being signed with Europe and Chinese currency appreciating, how does it help us improving our exports to Europe?"
   Answer: "We currently export mainly bio products to Europe. The FTA will eliminate duties that can enhance competitiveness, particularly for our bio products. We expect raw material import tariffs to reduce, which is beneficial for our agrochemical inputs."

4. Question: "Given the current raw material prices, do we need price hikes to normalize margins of close to INR 5,000 EBITDA per ton?"
   Answer: "It's difficult to predict quarterly margins precisely. However, I still believe we can achieve an annualized EBITDA of INR 5,500. There might be some quarterly reductions due to increased raw material costs and currency depreciation."

5. Question: "What would be our share of exports to Europe out of the INR 1,000 crores from Crop Protection last year?"
   Answer: "Currently, our exports to Europe would account for about 15% to 20% of that total."

6. Question: "Can you provide some comments on the current unit economics of the backward integration project considering sulfur prices?"
   Answer: "While it's challenging to pin down numbers, the value addition has reduced due to skyrocketing sulfur prices. Fortunately, rock prices have stabilized, mitigating some of the impact. I anticipate sulfur prices will normalize soon."

7. Question: "What is the EBITDA share from subsidy for this quarter?"
   Answer: "The EBITDA share from the subsidy for this quarter stands at 62%."

8. Question: "What is the utilization plan for the backward integration plant during Kharif?"
   Answer: "We generally target to operate the plant at 100% from day one, and that will be the plan for this project as well."

9. Question: "What kind of EBITDA increase can we expect when the phos acid plant comes on stream?"
   Answer: "We expect to increase annualized EBITDA from INR 5,500 to INR 6,500 across the entire capacity."

10. Question: "Can you provide details on the revenue and EBITDA for our retail business?"
    Answer: "We typically do not disclose retail as a separate segment, so I can't provide those specific numbers at this time."