Coromandel International - Margins disappoint, upgrade to BUY - Emkay

Q3FY13 results disappointed on margins front. EBITDA margins dipped to 5.3% (-390bps yoy & qoq), lowest since implementation of NBS. PAT stood at Rs 684mn, -53% yoy.

Coro announced acquisition of Liberty Phosphate, leading SSP player with ~1mn capacity & market share of 14%, at deal price of Rs 241 / share valuing it at approx Rs 4bn.

Sharp drop in fertiliser volumes (-21% 9MFY13) and higher inventories continues to affect profitability. However, we believe volumes will pick up in FY14 on revival of demand.

With continued pressure on margins we are downgrading our FY13/FY14 est by 27/20% to Rs 15.1/22.8 and target price to Rs 320. However upgrade to BUY due to price correction.

Source : Equity Bulls

Keywords