Coromandel International Ltd. – Murugappa Group
Coromandel International is the flagship company of the Murugappa Group, which owns ~56% of Coromandel through sister company E.I.D. Parry (India). Coromandel International is India’s leading agriculture solutions provider, offering diverse products and services across the Agri inputs value chain. Coromandel has successfully pioneered the rural retail model in India and operates a network of around 800 rural retail outlets across Andhra Pradesh, Telangana, Karnataka, and Maharashtra. The Company has 16 manufacturing facilities, producing a wide range of Nutrient and Crop Protection products which are marketed through a network of dealers and its own retail outlets. The company has the capacity to manufacture over 3.5 million tonnes per annum of fertilizers and pesticides, and ~1 million tonnes per annum of single superphosphate.
Valuation:
We believe the company to report robust growth in sales on the back of capacity expansion and backward integration. Considering the healthy balance sheet and consistent ROE of ~26% for the last 5 years, we recommend a BUY rating in the stock with the target price (TP) of Rs.1080, 15x FY24E EPS.
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