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Subsidy rate uncertainty
View Risks →Coromandel International Limited — Q3 FY24
Coromandel's Q3 FY24 results were sharply down YoY, with consolidated revenue of ₹5,523 crore (-33.8%), EBITDA of ₹358 crore (-54.2%), and PAT of ₹288 crore (-69.3%).
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Coromandel's Q3 FY24 results were sharply down YoY, with consolidated revenue of ₹5,523 crore (-33.8%), EBITDA of ₹358 crore (-54.2%), and PAT of ₹288 crore (-69.3%). The steep decline was driven by lower fertilizer volumes (down 11%), a sharp downward revision in NBS subsidy rates, and rising raw material costs. The crop protection segment was a bright spot, with 21% volume growth and EBIT margin expansion from 12.4% to 13.8%. Management highlighted the government's new reasonableness margin guidelines (12% PBT for integrated manufacturers) as manageable and not a deterrent to investment. The company is investing ₹2,000 crore in backward integration (sulfuric/phosphoric acid plant) and has a strong order book of ₹300 crore for its drone subsidiary Dhaksha. Near-term risks include continued subsidy rate pressure and potential margin compression if raw material costs remain elevated.
कोरोमंडल की तीसरी तिमाही के नतीजे पिछले साल की तुलना में काफी खराब रहे। कंपनी की कुल कमाई ₹5,523 करोड़ रही, जो 33.8% कम है। मुनाफा भी 69.3% गिरकर ₹288 करोड़ रह गया। इसकी मुख्य वजहें हैं: खाद की बिक्री में 11% की गिरावट, सरकार की ओर से दी जाने वाली सब्सिडी में कटौती, और कच्चे माल की बढ़ती कीमतें। हालांकि, फसल सुरक्षा वाले कारोबार में 21% की बढ़ोतरी हुई और मुनाफा भी बढ़ा। कंपनी ने कहा कि सरकार के नए मुनाफा नियम उनके लिए ठीक हैं। वे ₹2,000 करोड़ का निवेश कर रहे हैं और ड्रोन कंपनी के पास ₹300 करोड़ के ऑर्डर हैं। आने वाले समय में सब्सिडी दबाव और कच्चे माल की ऊंची कीमतें चुनौती बनी रह सकती हैं।
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Read Transcript →Quarter Snapshot
Fertilizer sales volume
9.38 lakh MT
-11% YoY
Q3 fertilizer sales volume declined 11% YoY to 9.38 lakh metric tons due to weak monsoon and lower crop sowing.
Crop protection volume growth
21%
+21% YoY
Crop protection business reported 21% volume growth in Q3, driven by exports and domestic formulation gains.
Dhaksha order book
₹300 crore
N/A
Drone subsidiary Dhaksha has a strong order book of ₹300 crore across defense, agriculture, and enterprise segments.
Market share (nutrients)
16%
+1.2pp YoY
Company's market share in nutrients improved to 16% in Q3 from 14.8% last year, despite lower industry volumes.
What Changed vs Last Quarter
NEW
Backward integration capex of ₹2,000 crore
Board approved setting up a sulfuric acid plant at Karnataka fertilizer unit and a 200,000-ton phosphoric acid plant at Kakinada, with total capex of ~₹2,000 crore.
NEW
Debottlenecking to add capacity
Management is evaluating debottlenecking options at existing plants to increase capacity, with details to be shared in the next call.
NEW
Nano DAP commercialization
Company's patented Nano DAP has received encouraging market response; Kakinada nano plant to be ramped up.
NEW
Retail store expansion
Company plans to add 50 new retail stores by end of FY24, expanding footprint in new markets.
DROPPED
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.
DROPPED
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.
DROPPED
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.
NEW RISK
Subsidy rate uncertainty
NBS rates were sharply revised downward for Rabi season, and raw material prices have risen since August. Management is representing for an interim correction, but it seems unlikely.
NEW RISK
Government margin cap impact
New government guidelines cap PBT margins at 12% for integrated manufacturers. While management sees no immediate impact, the cap could limit upside in high-margin years.
NEW RISK
Ennore ammonia gas leak incident
An ammonia gas leak occurred at the Ennore facility in December, leading to plant closure. Safety measures are being taken, but operational disruption and potential liability exist.
NEW RISK
Global crop protection headwinds
Elevated inventory, demand slowdown, and declining commodity prices globally continue to pressure the crop protection business, despite volume growth.
RISK GONE
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.
RISK GONE
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.
RISK GONE
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.
🤫 Topics management stopped discussing
Mentioned in Q1 FY24, Q2 FY24
Management expects full-year EBITDA per ton for NPK fertilizers to be around INR 5,000, supported by backward integration and potential MRP increases.
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Guidance and risk preview
Board approved setting up a sulfuric acid plant at Karnataka fertilizer unit and a 200,000-ton phosphoric acid plant at Kakinada, with total capex...
NBS rates were sharply revised downward for Rabi season, and raw material prices have risen since August.
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