Coromandel International recovery hinges on revised subsidies and captive acid benefits

Investment View and Valuation

Motilal Oswal’s November 12, 2026 results update on Coromandel International retains a Buy rating and values the company at around 25x FY28E EPS for a target price of Rs 2,400.

The broker considers the 2QFY27 operating performance broadly in line with expectations despite weak fertilizer demand, elevated raw-material costs and insufficient Kharif subsidy support. It expects revised Rabi nutrient-based subsidy rates, softer input costs and improved benefits from backward integration to support a recovery in 2HFY27.

2QFY27 Operating Performance

Coromandel International reported consolidated revenue of Rs 10,294 crore in 2QFY27, up around 7 per cent YoY and above Motilal Oswal’s estimate of Rs 9,300 crore. Nutrient and other allied revenue increased 4 per cent YoY to Rs 9,042 crore, while crop-protection revenue grew 22 per cent to about Rs 1,309 crore.

Fertilizer volumes remained weak. Manufactured NPK and DAP volume fell 38 per cent YoY to 665k MT, phosphate-fertilizer manufacturing volume including SSP declined 34 per cent to 859k MT, and overall NPK plus DAP volume decreased 30 per cent to 991k MT. Standalone crop-protection revenue excluding NACL grew 14 per cent YoY to Rs 950 crore.

Profitability and First-Half Financials

Reported EBITDA fell 18 per cent YoY to around Rs 942 crore, broadly in line with the broker’s expectation. EBITDA margin contracted 270bp YoY to 9.2 per cent, compared with the estimate of 9.6 per cent, as raw-material cost increased to 79 per cent of sales from 76.3 per cent a year earlier.

Nutrient and other allied EBIT margin declined 310bp YoY to 8.3 per cent, while crop-protection margin fell around 360bp to 10 per cent. Manufacturing EBITDA per MT, including SSP, decreased 8 per cent YoY to Rs 5,861, while phosphate-fertilizer EBITDA per MT was Rs 7,206, down 3 per cent. Adjusted PAT was about Rs 530 crore, down 34 per cent YoY and below the estimate of Rs 570 crore.

In 1HFY27, revenue rose 11 per cent YoY to Rs 18,500 crore, whereas EBITDA and PAT declined 12 per cent and 30 per cent to Rs 1,700 crore and Rs 920 crore, respectively.

Fertilizer Recovery Outlook

Management expects fertilizer profitability to improve from 3QFY27, although it did not provide specific FY27 EBITDA-per-MT guidance because demand, retail pricing and input costs remain volatile.

• Revised Rabi subsidy rates are around 64 per cent above Kharif FY27 rates on average.
• Potential price reductions of 10–15 per cent are expected for selected NP grades, with channel inventory normalisation anticipated by March 2027.
• Higher captive-acid utilisation is expected to improve economics in 2HFY27, assuming a backward-integration spread of USD 300–350 per MT.
• Coromandel received Rs 4,478 crore in subsidy payments during 1HFY27 and an additional Rs 1,200 crore in October 2026.
• Subsidy receivables stood at Rs 3,535 crore at September 2026.

Medium-Term Growth Drivers

Motilal Oswal’s medium-term thesis rests on expansion into new geographies and retail, differentiated-product launches, and capacity additions and integration benefits across the business.

• The 0.75 million MT Kakinada granulation plant is expected to be commissioned by February 2027 and reach full utilisation in FY28.
• Commissioned sulphuric and phosphoric acid facilities are expected to provide additional benefits.
• NACL’s manufacturing and R&D capabilities provide opportunities in fluorination-based intermediates and CDMO.
• Baobab Mining and Chemicals Corp. in Senegal is expected to scale up.
• Crop protection should benefit from new launches, capacity expansion for a key molecule and healthy exports. Standalone exports grew 44 per cent YoY in 2QFY27, while new products represented around 36 per cent of domestic crop-protection sales.

Estimates and Key Risks

Motilal Oswal revised FY27E revenue up 7 per cent but lowered adjusted PAT by 4 per cent. Its FY28E revenue, EBITDA and adjusted PAT estimates were reduced by 1 per cent, 1 per cent and 2 per cent, respectively.

The broker forecasts FY26–28 revenue, EBITDA and adjusted PAT CAGRs of 7 per cent, 16 per cent and 17 per cent, respectively.

Key risks to the thesis include:

• Subdued fertilizer consumption and delayed recovery in demand.
• Volatile raw-material costs.
• Uncertainty around subsidy support and retail-price reductions.
• Slower realisation of NACL integration benefits.