6 COROMANDEL share price target reports by brokerages below. See what is analyst's view on COROMANDEL share price forecast, rating, estimates, valuation and prediction behind the target. You may use these research report forecasts for long-term to medium term for your investment or trades in 2020.
IMD has predicted a normal southwest monsoon this season, which will aid in the offtake of fertilizers for the company. We believe CRIN’s focus on improving its bottom-line through increase in R&D spends, new product launches in the CPC segment, backward integration as well as increasing its volume of complex fertilizers should see net profit grow at a CAGR of 12% over FY20-FY22E. The recently announced Agri schemes to replace archaic laws, reform agri marketing, raise farm-gate prices and unify domestic markets can further boost demand for fertilizers in the long term. Hence we recommend a “Buy” and value CRIN at 18x FY22E EPS with a target of Rs.821.
Despite the recent rally in the stock, we still believe there is room for a further upside. The stock currently trades at 15.4x/13.9x FY21/FY22 P/E. Over the last 5 years, CRIN has traded at an average P/E of 16x. We expect revenue/PAT CAGR of 5%/17% over FY19-22 and value the stock at 17x FY22E EPS. Our TP of INR677 implies 18% upside. Maintain Buy.
Fertilizer segment revenues have grown at a CAGR of 14% over the last 3 years on the back of growth in sales volumes. Government initiatives to double farmer income to drive demand for fertilizer and crop protection products. Direct Benefit Transfer scheme of the central government has eased pressure on the working capital cycle of CRIN.Focus on increasing share of unique-grade fertilizers to expand EBITDA margins by 250 bps by FY22E.Backward integration projects completed this year to lower raw material cost and further aid margin expansion. We value CRIN at 16x on FY22E EPS with a target price of Rs.656 and recommend to BUY.
Coromandel International (CRIN) positively surprised the street with better than expected 2QFY20 results despite the delayed monsoon. During the post-results conference call CRIN management sounded upbeat on future prospects in nutrients and crop protection chemicals businesses. The company was especially positive on the 2HFY20E outlook based on an extended Kharif season and prospects for a robust Rabi cropping season supported by near full reservoir levels and expectations of a normal northeast monsoon. Based on these factors, we are upgrading our rating on CRIN from Sell to Accumulate after raising our TP 23.4% to Rs468 using 14x PE on revised Sept 21E EPS (0.34% up from CMP).
CRIN’s fertilizer manufacturing volumes increased 8% YoY, whereas trading volumes were down 62% in 2QFY20. Lower trading volumes will not impact margins for the quarter as manufacturing offers higher margins. Above-average rainfall in Kharif has led to increased reservoir levels, which will likely ensure higher yields and drive acreage in Rabi. This bodes well for fertilizer and agrochemicals consumption. Also, the rising backward integration (post commencement of new phos acid plant) and the decline in phos acid prices would drive margin expansion for CRIN. We expect revenue/PAT CAGR of 2%/14% over FY19-21 and value the stock at 16x FY21E EPS (it has traded at an average P/E of 17x over the last five years). Our TP of INR524 implies a 29% upside. Maintain Buy.
Downgrading to Sell on lowered estimates and TP Post the 1QFY20 results and the call, we have cut our revenue estimates by 19-21% and earnings estimates by 31% over FY20-FY21E, to factor in the weak 1QFY20 numbers and tempered expectations for the CPC business in FY20E. We are downgrading the stock from Accumulate to Sell on a 32% cut in our TP to Rs336 based on 16x PE on FY21E EPS (12% down from CMP).
CRIN’s management maintains their strategy on increasing non subsidy share to revenue. The management continued to strengthen its marketing and branding initiatives, gaining significant market share and improving its customer reach. They will continue to diversify regional / product segment and ensure multiple cash flow streams to protect against volatility in business. CRIN’s leadership position and a prudent management team make them a long-term structural story as the government is making a lot of efforts to improve farm economics. At CMP of INR 436.15, the company is trading at 9.6x FY21E EV/ EBITDA and 15x FY21E EPS. We value the company using average of EV/ EBITDA and P.E. multiple methodology. We have given an exit multiple of 11x for EV/EBITDA and 17x for PE to arrive at an average target price of INR 500 which is an upside of 15%.
Sales were largely in line with our estimates. We believe that key drivers will be backward integration (Phosphoric acid) and expansion (crop protection) will be key drivers to earnings over FY19-21E. We expect margin pressure to subside in FY20, due to backward integration in phosphoric acid, coupled with lower RM prices. We expect the non-subsidy business to grow (estimate a 20% CAGR in the crop protection business over FY20-21E to ` 25.0bn). The company expects the plant in Sarigam, which is currently shut, to become operational in 1HFY20. The Dahej plant, which manufactures Mancozeb, has become operational and is likely to lead to volume growth in the crop protection business. The stock is currently available at 15.4x and 13.6x FY20E and FY21E EPS. We maintain Buy, with a target price of ` 544 (17x FY21E EPS).
We maintain our estimate of revenue/PAT CAGR of 7%/13% over FY19-21. We value the stock at 17x FY21E EPS (in line with its five-year average trading multiple), which we believe is justified given the continuous market share gains, sustained return ratios and an expected revival in margins on phos acid plant commissioning. Our target price of INR542 implies a 24% upside. Maintain Buy.
Coromandel International’s management sounded cautiously optimistic about the company’s long-term growth prospects and likely easing of working capital pressure on the nutrient business. The company is banking on the backward integration project in nutrients and new launches in crop protection chemicals across technical grades as well as formulations to support its future growth outlook. Post FY19 numbers, we have marginally trimmed our estimates to factor in the subdued near-term prospects for CPC business as per the management’s guidance. We have retained Accumulate rating on the stock with a revised target price of Rs495 (from Rs509 earlier), up 7% from the CMP.
Market leader is Indian Farmers Fertiliser Cooperative Limited (IFFCO), a cooperative body. Over FY18-FY21E, we expect its overall revenues and EBITDA CAGR at 13.1% and 13.5%, respectively. EBITDA margin should bottom out in FY19 and improve thereafter. CRIN is expected to deliver EBITDA margin of 11.3% in FY21E vs. 10.7% likely in FY19E and 11.2% reported in FY18, in our view. While our estimates are in line with Bloomberg consensus estimates, we believe they are conservative given the recent inflation in raw material prices, and uncertain political environment as well as weather conditions. Leadership position and a prudent management team make CRIN a long-term structural story as the government is making a lot of efforts to improve farm economics. We initiate coverage on CRIN with a Buy rating and a target price of Rs600, up 35% from the CMP.
SOURCE: Data from D'Market via Quandl. Intraday data delayed 15 minutes.
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