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Lower Rabi subsidy rates impacting H2 margins
View Risks →Coromandel International Limited — Q2 FY24
Coromandel reported Q2 FY24 consolidated revenue of INR 7,033 crore, down ~31% YoY due to lower subsidy rates, but EBITDA remained flat at INR 1,059 crore and PAT grew 2% to INR 755 crore.
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Coromandel reported Q2 FY24 consolidated revenue of INR 7,033 crore, down ~31% YoY due to lower subsidy rates, but EBITDA remained flat at INR 1,059 crore and PAT grew 2% to INR 755 crore. EBITDA margin expanded ~470bps to 15.1% driven by stable raw material costs and backward integration benefits. Nutrient sales volume declined 7% to 11.6 lakh MT, while crop protection exports grew 29%. Management guided for full-year NPK EBITDA per ton of ~INR 5,000, supported by backward integration and potential MRP hikes. Key risks include lower Rabi subsidy rates, weak reservoir levels in southern India, and sustained price pressure from Chinese dumping in agrochemicals.
कोरोमंडल ने दूसरी तिमाही में 7,033 करोड़ रुपये का कारोबार किया, जो पिछले साल से 31% कम है। इसकी वजह सरकार की ओर से खाद पर दी जाने वाली सब्सिडी में कमी है। लेकिन कंपनी की कमाई (EBITDA) 1,059 करोड़ रुपये पर स्थिर रही और मुनाफा (PAT) 2% बढ़कर 755 करोड़ रुपये हो गया। कच्चे माल की कीमतें स्थिर रहने और खुद के उत्पादन से फायदा होने के कारण कंपनी का मार्जिन 15.1% तक पहुंच गया। खाद की बिक्री 7% घटी, लेकिन फसल सुरक्षा दवाओं का निर्यात 29% बढ़ा। कंपनी को उम्मीद है कि पूरे साल NPK खाद पर प्रति टन 5,000 रुपये कमाएगी। लेकिन रबी सीजन में कम सब्सिडी, दक्षिण भारत में पानी की कमी और चीन से सस्ते रसायनों की बाढ़ जैसे जोखिम हैं।
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Read Transcript →Quarter Snapshot
Nutrient sales volume
11.6 lakh MT
-7% YoY
Q2 FY24 sales volume declined due to subnormal monsoon and lower subsidy rates.
Crop protection export growth
29%
+29% YoY
Export segment grew 29% driven by new customers and dormant registrations.
Market share (nutrient)
15%
-4.2pp YoY
Q2 market share fell to 15% from 19.2% last year due to conservative placement.
Subsidy outstanding
INR 1,497 crore
-64% YoY
Subsidy receivables reduced sharply to INR 1,497 crore from INR 4,176 crore last year.
What Changed vs Last Quarter
NEW
Full-year NPK EBITDA per ton of ~INR 5,000
Management expects full-year EBITDA per ton for NPK fertilizers to be around INR 5,000, supported by backward integration and potential MRP increases.
NEW
Nano DAP plant commissioning in Q3 FY24
The Nano DAP plant at Kakinada is expected to be commissioned in Q3 FY24, pending regulatory approvals, with capacity of 1 crore bottles per year.
NEW
Crop protection CapEx of INR 1,000 crore over 24-36 months
The company plans to invest INR 1,000 crore in three multipurpose plants for crop protection, with first plant at Dahej under evaluation.
DROPPED
Manufacturing EBITDA per ton target of INR 5,500-6,000 for FY24
Management expects full-year manufacturing EBITDA for NPK and DAP to be in the range of INR 5,500-6,000 per ton, considering raw material prices, subsidy, and operational efficiencies.
DROPPED
Nano DAP commercial launch in October 2023
The Nano DAP plant in Karnataka will be commercialized in October 2023, with initial capacity of 4 million bottles per annum. The product will target northern states with high DAP usage.
DROPPED
Specialty chemicals product introduction in Q2 FY24
The company plans to introduce specialty chemical products in the second quarter by leveraging existing assets and technical capabilities.
DROPPED
CDMO business expected to materialize in 18 months
Management expects CDMO contracts to conclude and contribute within 18 months, with discussions ongoing with Japanese and European innovators.
NEW RISK
Lower Rabi subsidy rates impacting H2 margins
The government reduced NBS rates for H2 FY24, which will lower subsidy realization and compress margins, especially for non-integrated players.
NEW RISK
Weak reservoir levels in southern India
Reservoir levels in southern markets are at 64% of long-period average, which could constrain Rabi demand despite forecast of normal northeast monsoon.
NEW RISK
Sustained price pressure from Chinese dumping in agrochemicals
Chinese dumping of agrochemicals at low prices continues to pressure margins in the crop protection business, with no clear timeline for normalization.
RISK GONE
Rock phosphate prices may compress margins
While sulphuric acid prices have fallen, rock phosphate prices remain elevated, potentially compressing spreads for manufactured DAP and NPK if the lag in correction persists.
RISK GONE
Delayed monsoon impact on Kharif consumption
The delayed onset of monsoons led to high channel inventory buildup, and uneven rainfall in some regions could affect fertilizer offtake in Q2.
RISK GONE
Subsidy rate changes could affect profitability
The government's NBS rates for H1 were set lower in line with raw material moderation; any further reduction or delay in subsidy payments could impact cash flows and margins.
RISK GONE
Crop protection segment headwinds persist
High channel inventories and pricing pressure in the domestic crop protection market affected Q1 performance, and recovery depends on monsoon progression and demand pickup.
Fast read
Guidance and risk preview
Management expects full-year EBITDA per ton for NPK fertilizers to be around INR 5,000, supported by backward integration and potential MRP increases.
The government reduced NBS rates for H2 FY24, which will lower subsidy realization and compress margins, especially for non-integrated players.
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