Coromandel International Q2 Results Review - Near Term Headwinds To Cap The Stock: Nirmal Bang

Nirmal Bang Report

Coromandel International Ltd.'s Q2 FY24 revenue came in at Rs 69.88 billion – 17.8%/17.1% below our/street estimates. At Rs 7.57 billion, profit after tax was a beat of 7.9%/3% versus our /street estimates. The nutrient segment’s revenue missed our estimate by 20.5%, offsetting the 8.7% beat in crop protection chemical revenue.

Coromandel International's Ebit margin in nutrient/CPC segment beat our estimates by 317 basis points/201 bps, resulting in a 1.2%/32.6% beat in nutrient/CPC segment Ebit.

The beat in consolidated PAT was aided by a beat of 3.2% in blended Ebit and 31% in other income while interest expense came in lower by 29.5%. 

CPC business is facing global headwinds caused by persistent destocking and dumping by China.

Maintain 'Accumulate' post 1.8% cut in target price to Rs 1,059, valuing it at an unchanged price-to-earning of 14.25 times after rolling over to September-25E.

We expect healthy growth over FY23-FY26E despite the likely squeeze in H2 FY24E earnings.

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