Coromandel International - Even blue-sky scenario is not impressive - Kotak

Our blue-sky analysis of CRIN's FY2015E earnings suggests that peak ROCE will not be more than 13.5%, which is only a tad above cost of capital (~11%) of the company. It also means that CRIN's ROCE on a normalized basis would lie between 7% (FY2013) and ~13.5% and it is likely that over a cycle the company would just about recover its cost of capital. Given the sub optimal range of ROCE, it is our view that (1) the stock will keep on underperforming indices in the long term and (2) the stock will remain a trading play; there is a limited investment case for long-term investors unless one takes a view that a new business segment (for example, retail) will change normalized ROCEs. As of now, we don't see anything on the horizon, which could change the existing economics of business.

Source : Equity Bulls

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