Coromandel International: Growth Analysis

Nuvama Securities has maintained a “Buy” rating for Coromandel International, anticipating strong growth driven by strategic investments. The company is focusing on expanding its operations and diversifying its product offerings. This approach is expected to boost sales and profitability over the next five years.

Key Points

• Strong growth expected: 15% revenue increase over five years.
• Diversification key: Expanding into crop protection and chemistries.
• Integration driving profit: Internal raw material sourcing boosts earnings.
• Crop protection goals: ₹10,000 crore revenue target in five years.
• Expansion plans: 2,000-2,500 new retail outlets and Latin American growth.
• Nuvama’s ‘Buy’ rating reflects optimistic long-term prospects.

Coromandel’s strategy centers on significant growth, aiming for a 15% annual increase in revenue for the next five years. This growth stems from expanding into crop protection products, which currently make up a smaller part of the business. The company’s expansion is strategically designed to bolster its overall earnings potential.

Crop Protection Expansion

The company aims to double its crop protection business, targeting a revenue of ₹10,000 crore within five years. This includes strengthening existing partnerships like the 28% revenue contribution from Japanese collaborations. Furthermore, Coromandel plans to expand its retail presence with 2,000-2,500 new outlets over three years and is establishing a foothold in Latin America through distributor agreements.

Coromandel is also investing in strengthening its capabilities in areas like Mancozeb production, increasing capacity by 30%, and developing a Contract Development and Manufacturing Organization (CDMO) vertical, which is anticipated to gain momentum in two to three years. The company intends to create substantial mega brands leveraging its own active ingredients.

Fertiliser Strategy

Coromandel is undertaking capacity expansions in fertilizers, including increasing phosphatic granulation by 5 million tonnes and adding 1 million tonnes of SSP. The company also intends to expand its MAP capacity by 25,000 tonnes and introduce innovative products like Urea-SSP. A key component of this strategy is sourcing nearly two-thirds of raw materials internally, which will contribute significantly to improved profitability.

The company expects its EBITDA per tonne, currently around ₹4,500, to rise towards ₹6,500 as integration benefits materialize. Plans include increasing phosphoric acid capacity to 1 million tonnes, although the full requirement is estimated at 1.5 million tonnes. Despite potential short-term margin pressures from higher sulfur and phosphoric acid prices in H2FY26, analysts anticipate these to be temporary.

Beyond its core operations, Coromandel is actively exploring additional opportunities in areas like fluorination, phosphate chemistries, and battery-grade phosphoric acid, showcasing a commitment to future innovation and diversification. This strategic approach supports Nuvama’s confident ‘Buy’ recommendation for the company.

“Growth is a journey, not a destination.” – Coromandel International’s Vision

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