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Elara Capital
Coromandel International (Buy)
CMP: ₹384.3
Target: ₹511
Coromandel International reported revenue of ₹2,130 crore, down 16 per cent y-o-y on account of lower fertiliser sales and weak performance in the agrochemicals segment. Gross margin expanded by 130 bps y-o-y, due to softening of raw material prices in fertilisers. Ebitda declined 9 per cent y-o-y to ₹190 crore, with Ebitda margin expansion of 70 bps y-o-y to 9.2 per cent, which was in line with our estimates. Margin improvement was supported by forex gains (recognized in other expenses) and operational efficiency. Depreciation increased 19 per cent y-o-y to ₹30.5 crore while finance cost rose by 24 per cent y-o-y to ₹79.6 crore, due to an increase in borrowings on account of higher inventory and reclassification of leases under IND AS 116. Consequently, adjusted PAT declined by 31 per cent y-o-y to ₹62.5 crore.
Valuation: We cut our EPS by 9 per cent for FY20E and by 6 per cent for FY21E to factor in lower growth agrochemicals in Q1FY20. We reiterate ‘Buy’ with a revised target price of ₹511 from ₹543 based on 16x (unchanged) FY21E EPS of ₹32.0 (from ₹33.9).
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