Summary of earnings call for Coromandel International Ltd published on 01 Aug, 2025
Coromandel International Limited
Q1 FY26
Call date · July 25, 2025
1 · Management Commentary
Key Positives
- Consolidated total income grew 49% YoY to INR7,126 crores, driven by higher subsidy rates and volume growth across all business segments.
- EBITDA rose 55% YoY to INR782 crores, with margin expansion in crop protection and other businesses.
- Plants operated at full capacity (8.4 lakh tons, +6% YoY); phosphoric acid volumes up 23%.
- Market share in NPK segment improved to ~18%; unique grades share increased to 34%.
- Crop Protection and Bio segments delivered robust growth: revenue up 31% to INR725 crores, EBIT up 77% to INR111 crores.
- Retail business opened 73 new stores; on track to add 400 stores in FY26.
- Strong progress in backward integration projects and digital initiatives for operational efficiency.
Key Negatives
- Tightness in global DAP supply due to reduced exports from China and Russia, leading to higher raw material prices.
- Sulfur and phosphoric acid prices remained firm, impacting value addition.
- Negative sowing trends in cotton and oilseeds; only 70% of normal Kharif sowing completed as of the call.
- Potash imports down 71% in Q1 due to delayed price negotiations.
Forward Guidance
- Capex plans: Ongoing projects (phos acid, sulfuric acid, granulation) progressing well; ~INR2,000 crores capex planned, with additional INR300–500 crores for specialty and bio segments over 2–3 years.
- New products/segments: 10 new crop protection products launched in Q1; focus on Nano DAP, Nano Urea, and expansion into microbials and specialty nutrients.
- Expected client wins/losses: Expanding presence in Central and Northern India; targeting increased branded formulation business and CRAMS via NACL acquisition.
- Revenue/margin outlook: Normative EBITDA/MT of INR5,000 expected to sustain; crop protection segment to drive higher blended margins.
- Other strategic initiatives: Increasing stake in BMCC Senegal to 71.5%; scaling drone spraying services; JV with Sakarni Plaster for phospho gypsum-based building materials; leveraging NACL for product and market expansion.
2 · Q&A Highlights
Q 1 (Composite): What are the plans for specialty fertilizer manufacturing in India and rare earth mineral extraction?
A (Management):
• Evaluating investments to create capacity for key specialty fertilizer raw materials for captive use and exports; no current plans for rare earth mineral extraction.
Q 2 (Composite): Outlook on DAP supply, global capacity, and margin sustainability given raw material price trends?
A (Management):
• Confident Middle East supply will offset China shortfall; global capacity expansions underway; expect DAP prices to soften post-Rabi; aim to sustain INR5,000/MT EBITDA margin.
Q 3 (Composite): Update on BMCC output, scaling plans, and revenue contribution?
A (Management):
• FY26 output expected at 300,000–400,000 tons, aiming to double in 2 years; FY revenue run-rate INR350–400 crores.
Q 4 (Composite): Impact of backward integration and commodity price volatility on margins?
A (Management):
• Backward integration provides some insulation, but multiple factors (raw material sourcing, productivity, pricing) affect margins; digital initiatives and procurement efficiencies help mitigate volatility.
Q 5 (Composite): Status and strategic rationale for NACL acquisition and integration?
A (Management):
• Competition Commission approval received, awaiting SEBI clearance; integration to leverage complementary portfolios, expand branded formulations, and explore CRAMS; NACL to run as a subsidiary post-acquisition.
Q 6 (Composite): Capex funding plans and debt outlook?
A (Management):
• Capex to be funded from internal accruals and, if needed, long-term debt at favorable rates; open to debt for strategic investments.
Q 7 (Composite): Expansion strategy in North/Central India and plans for new plants?
A (Management):
• Expanding market presence using Kakinada capacity; no immediate plans for new plants in North; leveraging government freight reimbursement for competitiveness.
Q 8 (Composite): Crop Protection and Bio segment growth, export/domestic mix, and future outlook?
A (Management):
• Crop Protection: 40% exports, 60% domestic; domestic formulations volume up 33%, exports up 20%, Bio doubled; strong growth momentum expected to continue.
3 · Other Key Numbers
- Consolidated total income: INR7,126 crores (Q1 FY26) vs INR4,783 crores (Q1 FY25)
- EBITDA: INR782 crores (Q1 FY26) vs INR506 crores (Q1 FY25)
- Subsidy share of business: 83% (Q1 FY26) vs 81% (Q1 FY25)
- Subsidy received: INR1,300 crores (Q1 FY26) vs INR987 crores (Q1 FY25)
- Subsidy outstanding as of June 30: INR2,911 crores
- Plants operated at full capacity: 8.4 lakh tons (+6% YoY)
- Phosphoric acid volumes: +23% YoY
- NPK & DAP production: 8.37 lakh tons (Q1 FY26) vs 7.88 lakh tons (Q1 FY25)
- Market share (NPK segment): ~18%
- Unique grades share: 34% (vs 31% last year)
- POS consumption: 7 lakh tons (+46% YoY)
- SSP business volume: 1.9 lakh tons (+20% YoY); differentiated products share: 37%
- Drone spraying: 25,000 acres in Q1; target 0.5 million acres in FY26
- Specialty Nutrient volume growth: 12%; Organic fertilizer volume growth: 29%
- Crop Protection & Bio revenue: INR725 crores (+31% YoY); EBIT: INR111 crores (+77% YoY)
- 10 new crop protection products launched in Q1
- Retail: 73 new stores opened in Q1; target 400 new stores in FY26
- Depreciation run-rate: ~INR120 crores/quarter (BMCC consolidation)
- Crop Protection business: 40% exports, 60% domestic
- Domestic formulations volume growth: 33%; Exports: 20%; Bio: ~100%
- Capex guidance: INR2,000 crores (current projects); INR300–500 crores (specialty/bio over 2–3 years)
- BMCC stake: increasing from 53.8% to 71.5%
- BMCC expected to supply 25% of annual rock requirement in future
- Sulfuric acid price: ~$120; Sulfur price: peaked at $300+, now ~$275
- Forex range in Q1: INR83.76–86.91/USD
- Subsidy business EBITDA share: 65–67% (Q1 FY26) vs 70% (Q1 FY25)
- Granulation project (7.5 lakh tons): commissioning expected Q4 FY27
- Conversion rate (rock to acid): 3.5–3.75 tons rock/ton acid (blended); up to 4.25 tons for low grade, 3.25 tons for high grade
- DAP price: INR1,350/bag (fixed)
- NPK: 5:15 grade (urea SSP) positioned as DAP substitute
- No plans for urea manufacturing; focus remains on NPK, DAP, specialty, and bio segments
Note: This is an AI generated summary of the earnings call. There may be inaccuracies in the summary. Please refer to the original transcript before making investment decisions.