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Crop protection margin pressure persists
View Risks →Coromandel International Limited — Q4 FY24
Coromandel's Q4 FY24 consolidated revenue declined 28% YoY to INR 3,996 crore, driven by lower subsidy rates and raw material prices, though EBITDA rose 34% to INR 273 crore with margin expansion of 320 bps to 6.8%.
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Coromandel's Q4 FY24 consolidated revenue declined 28% YoY to INR 3,996 crore, driven by lower subsidy rates and raw material prices, though EBITDA rose 34% to INR 273 crore with margin expansion of 320 bps to 6.8%. The fertilizer business faced weak demand due to below-normal monsoon in key markets, but the crop protection segment posted 20% volume growth. Management guided for FY25 fertilizer EBITDA per ton of INR 4,500-5,000, supported by improved NBS rates and operational efficiencies. Key growth initiatives include debottlenecking to add 3.5 lakh tons capacity, backward integration with a new phosphoric acid plant (CapEx INR 1,030 crore), and scaling Nano DAP and drone businesses. Risks include persistent margin pressure in crop protection due to global inventory overhang and potential government policy changes on subsidy.
कोरोमंडल की चौथी तिमाही में कुल आय 28% घटकर 3,996 करोड़ रुपये रही। इसकी वजह सरकारी सब्सिडी दरों और कच्चे माल की कीमतों में कमी थी। हालांकि, कंपनी का मुनाफा (EBITDA) 34% बढ़कर 273 करोड़ रुपये हो गया और मुनाफा दर 6.8% तक पहुंच गई। खाद व्यवसाय में कम बारिश के कारण मांग कमजोर रही, लेकिन फसल सुरक्षा खंड में बिक्री 20% बढ़ी। कंपनी ने अगले साल प्रति टन खाद पर 4,500-5,000 रुपये मुनाफा कमाने का लक्ष्य रखा है। इसके लिए वह उत्पादन क्षमता बढ़ाएगी, नया फॉस्फोरिक एसिड प्लांट लगाएगी और नैनो डीएपी व ड्रोन व्यवसाय को बढ़ाएगी। जोखिमों में फसल सुरक्षा में कम मुनाफा और सरकारी नीतियों में बदलाव शामिल हैं।
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Read Transcript →Quarter Snapshot
NPK volumes (Q4 YoY change)
-6%
-6% YoY
NPK volumes declined 6% in Q4 FY24 vs Q4 FY23 due to weak monsoon and lower demand.
Dhaksha order book
INR 250 crore
New
Drones subsidiary Dhaksha has an order book of INR 250 crore, expected to be executed in H1 FY25.
Crop protection volume growth
20%
+20% YoY
Crop protection business registered 20% volume growth despite industry headwinds.
Fertilizer EBITDA per ton guidance
INR 4,500-5,000
Improvement from Q4 levels
Management guided for FY25 fertilizer EBITDA per ton of INR 4,500-5,000, up from sub-INR 2,000 in recent quarters.
What Changed vs Last Quarter
NEW
Fertilizer EBITDA per ton of INR 4,500-5,000 for FY25
Management expects EBITDA per ton in the range of INR 4,500-5,000 for FY25, driven by improved NBS rates and operational efficiencies.
NEW
CapEx of INR 1,200-1,500 crore for FY25
Total capital expenditure for FY25 is estimated between INR 1,200 crore and INR 1,500 crore across multiple businesses.
NEW
Nano DAP plant commissioning in June 2024
The Nano DAP plant at Kakinada with 1 crore bottle capacity is awaiting regulatory approvals and expected to start production in June 2024.
UPDATED
Debottlenecking to add 3.5 lakh tons granulated capacity
Plans to debottleneck granulated capacity at Kakinada and Vizag, adding 3.5 lakh tons.
DROPPED
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.
DROPPED
Nano DAP commercialization
Company's patented Nano DAP has received encouraging market response; Kakinada nano plant to be ramped up.
DROPPED
Retail store expansion
Company plans to add 50 new retail stores by end of FY24, expanding footprint in new markets.
NEW RISK
Crop protection margin pressure persists
Global inventory overhang continues to pressure margins in the crop protection business despite volume growth.
NEW RISK
Dependence on monsoon for fertilizer demand
Below-normal monsoon in key markets has historically impacted volumes; any deviation from normal rainfall could affect sales.
RISK GONE
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.
RISK GONE
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.
RISK GONE
Global crop protection headwinds
Elevated inventory, demand slowdown, and declining commodity prices globally continue to pressure the crop protection business, despite volume growth.
🤫 Topics management stopped discussing
Mentioned in Q2 FY24, Q3 FY24
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.
Mentioned in Q1 FY24, Q3 FY24
Elevated inventory, demand slowdown, and declining commodity prices globally continue to pressure the crop protection business, despite volume growth.
Mentioned in Q1 FY24, Q3 FY24
Company's patented Nano DAP has received encouraging market response; Kakinada nano plant to be ramped up.
Mentioned in Q1 FY24, Q3 FY24
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.
Fast read
Guidance and risk preview
Management expects EBITDA per ton in the range of INR 4,500-5,000 for FY25, driven by improved NBS rates and operational efficiencies.
Global inventory overhang continues to pressure margins in the crop protection business despite volume growth.
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