Coromandel International Q1 FY22 Conference Call Highlights

• According to Coromandel international performance analysis Revenue from operations grew by around 14% YOY & grew by 28% QOQ standing at 3664 crores

• Expenses have risen by 13% YOY & 22% QOQ and stood at 3181 crores which is observed by Coromandel international fundamental analysis.

• EBITDA stood at 505 crores growing 19% YOY & 82% QOQ by Coromandel international stock fundamental analysis. Such high Sequential difference is due to higher ratio of other expenses which have lowered in current Quarter despite high purchase of goods in current Quarter of fundamental and technical analysis of Coromandel international.

• EBITDA Margin of balance sheet of Coromandel international with ratio analysis stood at 14% with a increment 1% YOY & 4% QOQ

• PAT stood at 338 crores rising 34% YOY & 116% QOQ which is observed by Coromandel international share price graph.

• According to Coromandel international stock analysis ,PAT margin stood at 9% increasing 1% YOY & 4% QOQ.

• Debt Equity Ratio stood at 0.099 as on 30th June 2021 from 0.30 as on 30th June 2020 by the profit and loss account of Coromandel international.

• Interest coverage ratio stood at 29.3 as on 30th June 2021 from 9.6 as on 30th June 2020 as of fundamental analysis of Coromandel international.

Business Highlights

• Nutrients contributed 83% of revenue while crop protection contributed 17% of revenue.

• According to economic analysis of Coromandel international ,nutrient revenue grew from 2807 crores to 3070 crores @ of 9.3% YOY & from 2365 crores to 2807 crores @ 29.8%.

• Crop protection revenue grew from 420 crores to 621 crores @ of 50% YOY & from 514 crores to 621 crores @ 22%

• Despite various challenges, the agriculture sector remains in a bright spot with GVA growing at 3.6% YoY by the Coromandel international annual report analysis.

• In FY22, global food prices continue to remain firm, driven by strong demand for cereals and vegetable oil, fall in inventory levels and stockpiling in China

• The company’s key markets have received decent rainfall and reservoir levels also remain above long-term average as of the profit and loss statement of Coromandel international.

• Crop area sown is down 9% but is expected to catch-up soon

Phosphatic fertilizer sector

• Di Ammonium Phosphate (DAP) and complex market sales were down 14% in 1QFY22 to 0.437 crore tonnes. Industry PoS was also down by 13% over last year to 0.396 crore tonnes.

• Industry complex sales grew by 2.9% for the quarter to 2.51mn tonnes.

• Relentless rise in imported phosphoric acid price – contract price for 2QFY22 was set at US$1,160/te vs US$998 in 1QFY22. The government had just increased subsidy under the NBS scheme in May’21 to compensate the increase in the price of imported phosphoric acid in 1QFY22 (QoQ from US$795 to US$998/te)

• The 1QFY22 price of ammonia also increased from US$375 to more than US$500/the QoQ.

Coromandel Performance

• Nutrient & Allied business had a good quarter due to smart sourcing and economies of backward integration and cost efficiency.

• New product launches like Grow Shakti, Grow Smart and Grow Plus did well and helped farmers improve productivity. The company is also promoting balanced nutrition through special grades of NPK compared to generic grades in DAP.

• The  Coromandel international stock price in 1QFY22 improved to 18.1% vs 16.4% YoY. SSP fertilizer market share improved to 14% in1QFY22 vs 10% in1QFY21.

Capacity

• DAP and complex fertilizer plants operated at 73% utilization on average. This was due to annual turnaround completed in Vizag and Ennore in the first fortnight of 1QFY22. Also, the company had raw material constraints from one of the main suppliers (of ammonia) due to fire at their plant, which has been restored now.

Margin expansion in 1QFY22 was due to four factors:

• Sourcing strategy by looking into multiple process for importing raw material

• Flexibility of our plants to process multiple grades of rock and phos acid

• Running the phos acid plants at high capacity levels

• Lower cost opening inventory of materials - modest inventory gains

Crop Protection

• CPC business revenue grew by 50% YoY and was supported by strong domestic B2B market, primarily in Mancozeb, which grew at 60% both in the US and RoW and also due to lower base in 1QFY21.

• New launches: The company introduced 6 new-gen molecules in June’21, which included four insecticides and one each in fungicide and herbicide segments. These included One 9(3) product, 2 comarketed and 3 combinations, which will further strengthen the product option.

• There has been a sharp price increase in raw material costs, especially for mancozeb—the price of two key raw materials, EDA and CS2 had surged in1QFY22.

• The growth in CPC is mostly from higher volume with a marginal contribution from price increase

Growth in Crop Protection is based on:

• High-capacity utilization of CPC plant up from 45% to 79% YoY helped in better liquidation and growth in shipments

• Good traction in export markets, especially B2B customers

• Traction in new products

• Bio-pesticide business

• The company continues to promote green solutions through organic fertilizer and bio-pesticide business. In1QFY22, the company expanded its neem extraction capacity by 50% for its neem -based bio-pesticide.

Subsidy share

• The subsidy/non-subsidy share of revenue stood at 76%/24% vs 80%/20% YoY.

• Subsidy outstanding was lower at Rs1150 crores as of end-1QFY22 vs Rs2590 crores in 1QFY21. Subsidy outstanding included Rs360 crores pending with the government for payment.

• In 1QFY22, the subsidy received from the government was Rs493 crores vs Rs513 crores YoY.

• Good business performance and working capital management resulted in an overall positive cash balance with the company.

Demand and pricing

• The company expects some softening in raw material prices post the ongoing kharif season

• The company expects tight demand-supply for fertilizers – with high demand and just adequate supply from the available capacity

• In fixing MRP for fertilizers, the company has considered price increase of raw materials like ammonia, sulphuric acid and the need to offset an increase in N & K not considered in the last NBS revision, which covered only the P nutrient.

Projects under execution in FY22

• Evaporator plant at Vizag will be completed by August’21 and drive cost-savings as it would improve availability of concentrated phosphoric acid at the Kakinada plant - overall captive supply will meet 50% of its requirement

• Liquid fertilizer plant is being set up in FY22.

Evaluating new projects

•  For backward integration and capacity augmentation in complex fertilizers
• Two SSP plants being modified from powder to granulated products, which have higher demand and value.
• A multi-purpose ant for CPC
• Purchase of land for further expansion of both technical and formulations in the CPC segment Outlook

• The company expects to maintain the nutrient segment’s margin at ~Rs4,000-4,250/tonne for FY22 based on enhanced capacity utilization, strategic tie-up of raw material sourcing and increasing share of unique grades.
• In CPC, the company is looking to grow new generation molecules by partnering with innovators, through inhouse R&D and setting up of MPP. It is also looking to build capacity in AI and Intermediates.

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