Coromandel International Limited Q1 FY27 Earnings Call Summary

Event Participants

Executives

2 Deepak Natarajan, Shankar Subramaniam

Analysts

14 Ankur Periwal, Darshita Shah, Dhruv, Himani, Naushad Chaudhary, Neeraj, Prashant, Ranjit, Riju, Sandeep Mukherjee, Sarang, Soumya, Vipul Kamal, Vivek

Financials & KPIs

Geographic & Segment Commentary

• Fertilizers (India): Sales volume down 9% to ~10 lakh tons with production deliberately cut to 6.9 lakh tons (72% utilization) for inventory optimization amid volatile raw material markets. Primary market share improved to 22% from 18% and secondary sales grew 13% to 7.9 lakh tons; SSP volumes rose 19% with Gromor Urea SSP at >50% of mix. Margins under pressure from elevated sulfur, ammonia, and phosphoric acid costs; industry NPK and DAP production declined 28% and 13% respectively during the quarter.

• Crop Protection: Record Q1 with revenue up 20% to ₹870 crores and EBITDA up 44% to ₹159 crores, led by exports and B2B sales despite soft domestic formulations. Three new products launched; Mancozeb capacity expansion on track for September commissioning. NACL EBITDA margin improved to 11% from 8%, though revenue moderated to ₹383 crores on export price pressure in one key molecule.

• Specialty Nutrients & Organic: Strong quarter with 25-30% top-line growth trajectory and ~20% EBITDA margin; three new products launched across water-soluble and sulfur nutrition. MAP plant at Kakinada and seaweed granulation plant progressing; bentonite-sulfur capacity doubled to ~88,000 tons.

• Retail: Standalone revenue up 85% YoY; 76% of stores profitable vs 61% last year; network expanded to 1,200+ outlets with 22 new stores added during the quarter; strengthening e-commerce and omni-channel capabilities.

• Nano & Bio: Nano DAP volumes grew 2% with ~60% market share; exports initiated with registrations secured in select markets; UP/Maharashtra bans moderating growth. Bio business developed two new biostimulant/microbial products; moving white-label manufacturing in-house to capture full value chain.

• International (Senegal/BMCC): Produced 1.1 lakh tons of rock phosphate, in line with plan; evaluating a $5-6 million SSP facility (150,000 tons) using reject rock for domestic and export markets. Phosphoric acid Q2 settlement at $1,700/ton vs $1,350 in Q1 reflects sharp international price increases.

Company-Specific & Strategic Commentary

• Backward Integration & Capacity: Commissioned sulfuric acid plant (achieved rated capacity with power generation) and phosphoric acid plant (stabilizing); 750,000-ton granulation project on track for Q4 FY27 commissioning with 50% of volume planned through own retail. Management targets normalized EBITDA of ₹6,500/ton in nutrients vs ~₹5,000 currently.

• Capital Allocation: ~₹7,000 crores invested over last 3-4 years across organic/inorganic opportunities; sustainable capex guided at ~₹300 crores/year; prioritizing cash generation before new capacity; securing additional land in Andhra Pradesh for future expansions.

• CDMO & Innovation: Establishing launch facility for fluorination-based chemicals; exploring AI intermediates via NACL for global MNCs; corporate research center at IIT Madras Research Park for nano, biological, and advanced chemistry platforms; crop protection pipeline has 3-4 new 9(3) registrations per year with 3-4 year visibility.

• Digital & Traceability: Participating in National Fertiliser TRACE QR-code pilot across 10-12 states; drones business scaling - ~100-150 drones purchased in Q1 with 500-fleet target for the year; evaluating higher-capacity fertilizer application drones.

• Sustainability & Policy: Received Responsible Care certification; supportive of National Urea Investment Policy (9-10 million tons additional capacity over 8 years) and ₹37,500 crore coal/lignite gasification scheme to reduce import dependence.

Guidance & Outlook

Risks & Constraints

Q&A Highlights

Subsidy Revision & Industry Viability

• Question: Is subsidy policy the key for NPK production to recover? (Dhruv, Edelweiss AMC)
• Answer: 100% — domestic production is uneconomical at current sulfur/ammonia prices without NBS revision; Q2 will be impacted if no correction. (Shankar Subramaniam)
• Question: Could this be a year where the hit is shared by farmers, companies, and government? (Naushad Chaudhary, Aditya Birla MF)
• Answer: Management is only seeking the policy-defined six-month average NBS rate, not ad hoc support; fair expectation that it should be met. (Shankar Subramaniam)

On-Ground Demand & NPK vs DAP Dynamics

• Question: Is there any shortage or structural shift in fertilizer demand? (Ankur Periwal, Axis Capital)
• Answer: No shortage — urea/DAP/NPK inventories comfortable; early-season buying of lower MRP bags plus monsoon slowdown drove offtake moderation, not availability. (Shankar Subramaniam)
• Question: Will farmers shift from NPK to DAP given the price gap? (Riju, Antique Stock Broking)
• Answer: No reverse shift; DAP's ₹1,300/bag is artificially pegged vs 20:20 at ₹2,100; farmers understand balanced nutrition, but excessive NPK prices could restrict demand — already presented to government. (Shankar Subramaniam)

Crop Protection Growth & Mancozeb

• Question: What drove 20% growth in standalone crop protection despite soft markets? (Sarang, Oldbridge)
• Answer: B2B export growth in molecules where China doesn't compete, plus input cost pass-through; focus now on building B2C brands and combination products, especially Latin America post-Mancozeb expansion. (Shankar Subramaniam)

Capital Allocation & Capex Discipline

• Question: What are the capex priorities after commissioning PA/SA and granulation? (Soumya, Avendus Alt)
• Answer: Cash generation from the ~₹7,000 crores invested over 3-4 years is the priority; sustainable capex ~₹300 crores/year; no immediate fertilizer capacity adds; evaluating MAP plant, Senegal SSP, and securing AP land for future needs. (Shankar Subramaniam)

NACL Margin Trajectory

• Question: Is NACL's 11% margin the steady-state level? (Soumya, Avendus Alt)
• Answer: 10-11% is reasonable for the current portfolio; significant improvement requires new product launches and intermediate investments. NACL's revenue dip reflects price moderation on one MNC molecule, while Coromandel passed on input costs. (Shankar Subramaniam)

Depreciation Spike & BMCC Contribution

• Question: Why is depreciation much higher this quarter? (Riju, Antique Stock Broking)
• Answer: New capex added only ₹16-18 crores; rest is ₹20-21 crores NACL intangibles amortization and ~₹30 crores BMCC mining overburden amortization below EBITDA. (Deepak Natarajan) BMCC's 0.5 million tons at ~$30/ton net EBITDA is a minimum; strategic value lies in rock security for Kakinada and phosphoric acid cost advantage. (Shankar Subramaniam)

QR Code Traceability & DBT Potential

• Question: Is the TRACE QR code framework a precursor to DBT? (Ranjit, IIFL)
• Answer: Pilot underway in 10-12 states (2-3 districts each); witnessed in Medak, Telangana — Aadhaar-linked farm data determines eligible fertilizer quantity, restricting urea/DAP overuse, removing channel arbitrage, and saving subsidy. If scaled, it's win-win. (Shankar Subramaniam)

Sulfur Price Outlook

• Question: Thoughts on sulfur remaining high? (Soumya, Avendus Alt)
• Answer: Likely to remain high for some time but not sustainable; structural demand from EV battery nickel leaching (Indonesia); prices should soften but may take a while; industry won't source at exorbitant levels. (Shankar Subramaniam)

Drones & Nano Fertilizers

• Question: Any numbers on Dhaksha drones? (Vipul Kamal, Sumangal Investment)
• Answer: Agri-drone focus; Coromandel bought ~100-150 drones in Q1 with 500-fleet target for the year; defense orders in final stage; not a meaningful EBITDA drag. Nano DAP exports have started despite UP/Maharashtra bans. (Shankar Subramaniam)

Key Takeaway

Coromandel delivered a resilient Q1 FY27 despite monsoon deficit and raw material inflation, with consolidated revenue up 15% YoY to ₹8,215 crores, though EBITDA fell 3% to ₹761 crores and net profit declined 24% to ₹382 crores as a 10% NBS subsidy hike lagged post-Middle East crisis input costs. Fertilizer volumes moderated 9% to ~10 lakh tons on deliberate production cuts (72% utilization), yet primary market share rose to 22% from 18% and secondary sales grew 13%. Crop protection was the standout, with record revenue of ₹870 crores (+20%) and EBITDA of ₹159 crores (+44%) on export-led growth; retail revenue surged 85% with 76% of stores profitable. Strategic assets — sulfuric/phosphoric acid plants and the Q4 granulation project — underpin a normalized ₹6,500/ton EBITDA target. Key watch items are kharif NBS subsidy revision, sulfur price trajectory, and monsoon recovery, which will determine Q2 production and margin recovery.