CRISIL reaffirms ratings of Coromandel Intl; maintains 'stable' outlook

Coromandel International said that CRISIL Ratings has reaffirmed its ratings on the bank facilities of the company at 'CRISIL AAA/Stable/CRISIL A1+'.

CRISIL said that the ratings continue to reflect its robust market position in Indias phosphatic-fertiliser market and strong operating efficiency supporting a healthy business risk profile.

Coromandel continues to remain the largest single super phosphate player in the domestic market, with a share of approximately 15% in fiscal 2023; and the second-largest player in other complex phosphatic (DAP+NPK) fertilisers with a primary share of approximately 15%. Financial risk profile remains robust, with a continued net debt-free position.

Revenue was Rs 18,146 crore and Ebitda (earnings before interest, taxes, depreciation, and amortization) Rs 2,126 crore for the nine months through December 2023, against Rs 24,152 and Rs 2,523, respectively, in the corresponding period previous fiscal.

Revenue and operating profitability weakened on account of the nutrient segment (contributes >80% to the overall earnings before interest and tax [EBIT]) due to a sharp downward revision in NBS (nutrient based subsidy) rates by the government for the second-half of fiscal 2024.

However, backward integration measures undertaken, and favourable supply agreements have cushioned the impact on profitability. The annual Ebitda per tonne is likely to be maintained at around Rs 5,000 in the near term on the expectation of revision of NBS rates, in line with raw material prices.

Any significant revision in NBS rates and resultant impact on operating profitability will remain monitorable over the medium term.

Furthermore, the company has announced capital expenditure (capex) to increase the backward integration capacity of both its key raw materials, phosphoric acid and sulphuric acid, at the Kakinada (Andhra Pradesh) plant, which was the companys only non-integrated plant. This will further help improve availability of raw material and cushion profitability over the medium term.

The ratings continue to reflect the strong position of Coromandel in Indias phosphatic-fertiliser market, strong operating efficiency supported by backward-integration facilities, and robust financial risk profile.

These strengths are partially offset by exposure to risks related to the regulated nature of the fertiliser industry in India.

Coromandel, one of the flagship companies of the Murugappa group. The companys business structure is bifurcated into two segments: nutrient and other allied businesses, and crop protection business. The company has the capacity to manufacture over 3.6 million tonne (MT) of fertilisers and pesticides and 1.0 million MT of single super phosphate per annum. Besides this, the company manufactures water soluble fertiliser, biopesticides and agrochemical technicals and formulations.

For the first nine months of fiscal 2024, profit after tax (PAT) was Rs 1,477 crore on total income of Rs 18,146 crore, against Rs 1,766 crore and Rs 24,152 crore, respectively, during the corresponding period previous fiscal.

The scrip rose 0.86% to currently trade at Rs 1099.45 on the BSE.

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