Coromandel International Limited — Q3 FY25 earnings call

Call held 6 Feb 2025

Management summary

Coromandel International delivered a strong Q3 FY25 performance, with consolidated revenue growing 28% and net profit more than doubling, primarily driven by robust volume growth in NPK and SSP segments. The company is actively pursuing strategic capacity expansions and backward integration initiatives, including new phosphoric acid and NPK facilities, while also expanding its retail footprint and focusing on high-value products in crop protection. An interim dividend of ₹6 per share was declared, reflecting confidence in future prospects despite some raw material price volatility and subsidy-related challenges.

Highlights

  • Consolidated total income grew 28% YoY to ₹7,049 crores in Q3 FY25, driven by higher volumes across business segments.

  • Consolidated EBITDA for Q3 was ₹722 crores, significantly up from ₹358 crores in the prior year, reflecting improved operational efficiencies.

  • Net profit after tax more than doubled to ₹508 crores in Q3 FY25 compared to ₹228 crores last year.

  • Primary sales of NPKs increased by 21% to 11.4 lakh tons in Q3, and SSP quarterly volume grew 29%, supported by value-added products.

  • An interim dividend of ₹6 per share was approved, and the retail business saw a 20% top-line growth in Q3.

Concerns

  • Phosphatic fertilizer imports were lower by almost 20% (5.6 million tons) for the 9-month period due to supply chain disruption of DAP.

  • Certain NPK grades, like N-10, face challenges due to very low subsidy on potash, leading to a shortfall in margin for these products.

  • The cost structure of Baobab Mining is currently higher due to lower output, though profitability is expected to improve with volume scale-up.

Key financials

  1. Consolidated Total Income ₹7,049 Cr +28%YoY
  2. Consolidated EBITDA ₹722 Cr +101.7%YoY
  3. Net Profit After Tax ₹508 Cr +122.8%YoY
  4. Net Interest Income ₹51 Cr +64.5%YoY

What they filed

Q1 FY27: revenue up 10.6%, net profit down 25.8% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue7,432 6,926 4,993 7,001 9,411 +27%8,457 +22%5,661 +13%7,744 +11%
EBITDA983 727 438 738 1,147 +17%758 +4%459 +5%621 −16%
Net profit696 525 389 508 816 +17%530 +1%154 −60%377 −26%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • Nutrients and Allied businesses
    91% Revenue Share
  • Crop Protection business
    9% Revenue Share
  • Subsidy businesses
    84% Revenue Share69% EBITDA Share

Capital allocation

high confidence
  • Capex Capex disclosed
    • New phosphoric acid plant and related sulfuric acid at Kakinada
    • Additional 7.5 lakh tons NPK facility at Kakinada
    • Multi-product plant at Ankleshwar
    • Brownfield capacity expansion for technical facility (Sarigam and Dahej)
    • SSP capacity expansion at Udaipur
    • New plant for sulfur capacity in specialty nutrients
    Our ongoing project at Kakinada for setting up 2 lakh tons of phosphoric acid and related sulfuric acid is progressing well and we expect the plant to be commissioned by Q4 of next year. As you all know, we announced investment in additional capacity of 7.5 lakh tons of NPK facility at Kakinada. Last week, we carried out Bhumi Pooja to initiate the project activity, and we are in the final stage of negotiating with technology providers and business partners and ensure that this project will come up in the next 24 months and be there for commercial production from Q4 of 2027. The business has initiated activities for its multi product plant at Ankleshwar, which was approved by the Board in the last Board meeting, and we are progressing well to commission the plant in 18 months' time. Besides the multiproduct plant for which we took approval, we are looking at some brownfield capacity expansion, which may come up between Sarigam and Dahej. Now we are trying to add this facility at Udaipur, which is another plant for SSP. We have increased our sulfur capacity also and have put up a new plant.
  • Dividend ₹6/share (interim)
    The Board in its meeting held on 30th January 2025, has approved an interim dividend of Rs. 6 per share.
  • M&A Baobab Mining Acquisition · Integrated

    Securing rock phosphate for backward integration

    Cost structure currently higher due to lower output, but expected to be competitive once volume improves and output stabilizes.

    You are right, Baobab Mines, we are scaling up. During this quarter, we have commissioned the fixed processing plant and the operations are getting stabilized. At this current rate, we are able to ship out 1 ship every 45 days. And soon that will get reduced to 30 days with improved throughput. So we do expect Baobab Mining can scale up volume to 3,00,000 tons next year and in the following year up to 5,00,000 tons, which is a significant supply to meet the Kakinada rock requirement for the new phosphoric acid plant. So we don't anticipate any challenge in terms of securing rock phosphate for the new plant. It will be driven by Senegal supply plus other existing sources where we have long-term contracts. Yes. It should, with the cost structure once the volume improves. Currently, the cost structure is a little on the higher side because of the lower output, but when the output gets stabilized, we are highly confident that we'll be much more competitive.
  • M&A Global Trading Company (CDMO opportunity) Joint venture · Announced

    Niche product segments, opening doors for future engagements in bio business

    The company is collaborating with a global trading company based out of Europe for niche product segments similar to a CDMO opportunity, which can open up doors for future engagements and can take the bio business to the next level.
  • Liquidity Liquidity disclosed Focus on working capital improvements has helped in augmenting the cash position. Company intends to utilize the investable surplus for its capital investments as well.
    Focus on working capital improvements has helped in augmenting the cash position. Company intends to utilize the investable surplus for its capital investments as well.

Guidance & targets

Capacity

  • NPK Capacity Capacity · in 2 years' time · High confidence 1 million tons
    But going forward, our aim would be to reach 1 million ton capacity in 2 years' time, probably taking it to 8 lakh tons next year and thereafter 1 million ton, and that too with focus on these specialty grades, which are as good as any other NPK products.

    — Sankarasubramanian

Volume

  • Baobab Mining Volume Volume · next year · High confidence 3,00,000 tons
    So we do expect Baobab Mining can scale up volume to 3,00,000 tons next year and in the following year up to 5,00,000 tons, which is a significant supply to meet the Kakinada rock requirement for the new phosphoric acid plant.

    — Sankarasubramanian

  • Baobab Mining Volume Volume · following year · High confidence 5,00,000 tons

    — Sankarasubramanian

Retail

  • Number of Retail Stores Retail · by FY27 · High confidence 1,500 plus

    From 810 today

    And you said we are looking at doubling it over 2 years to maybe 1,500 plus by FY '27? Sankarasubramanian: Correct.

    — Sankarasubramanian

Revenue

  • Specialty Nutrients Revenue Revenue · next 2 years · High confidence ₹1,100-1,200 crores

    From ₹550-600 crores today

    It will be in the range of Rs. 550 crores to Rs. 600 crores on an annualized basis. Our aim would be to see how do we double it in the next 2 years' time.

    — Sankarasubramanian

Profitability

  • SSP Blended Margin Profitability · High confidence ₹2,500 per ton

    From ₹1,500-2,000 per ton today

    So blended margin with this sort of a combination of 60:40 should go to Rs. 2,500 per ton.

    — Sankarasubramanian

What to watch in Q4 FY25

Kakinada Phosphoric Acid Plant Commissioning

Q4 next year (FY26)
Current Progressing well
Target Commissioned

Why it matters

This new plant is crucial for backward integration, enhancing cost efficiency and raw material security for phosphoric acid production.

Our ongoing project at Kakinada for setting up 2 lakh tons of phosphoric acid and related sulfuric acid is progressing well and we expect the plant to be commissioned by Q4 of next year.

Risks & concerns

  • Raw Material Price Volatility

    medium

    Sulfur and sulfuric acid prices have seen an uptick due to demand from China and Indonesia, though overall raw material prices are expected to remain stable with easing geopolitical tensions.

    Management acknowledged

  • Low Subsidy on Potash for NPK Grades

    medium

    Certain NPK grades, like N-10, face challenges due to very low subsidy on potash, leading to a shortfall in margin, and the company is representing this to the government.

    Management acknowledged

  • Baobab Mining Initial High Cost Structure

    low

    The cost structure of Baobab Mining is currently higher due to lower output, but it is expected to become competitive once volumes improve and output stabilizes.

    Management acknowledged

Q&A highlights

4 direct, 2 evasive
Mancozeb volume growth and pricing in Q3 FY25 Evasive
So my suggestion would be, instead of specific products and pricing, let's look at the macro picture. I would request Raghu to respond to it. But we'll not get into the specifics on the product pricing and volume at this stage.

Management declined to provide specific product-level volume and pricing details, indicating a policy against granular disclosure for competitive reasons.

Asked by Nirav Jimudia

Production of technicals and shift to new generation molecules Partial
It may not be appropriate to look at absolute volume of technicals because more and more new products are coming in, which are high value and low volume. Some molecules also go out of the system. So it may not be appropriate to look at tonnage as the indicator for the future growth prospects. Rather we should look at whether we have got registration for new generation molecules, which can improve the overall business prospects and the margin structure.

Clarifies the company's strategic shift in Crop Protection towards higher-value, lower-volume new generation molecules rather than focusing solely on tonnage.

Asked by Nirav Jimudia

SSP volume growth and margins for FY25/FY26 Direct
SSP has definitely revived. In fact, current year performance is much better. As you rightly said, due to the shortage of DAP and also the good monsoon situation, there has been a spike in SSP volume... You are absolutely right, the margins are in the range of Rs. 1,500 to Rs. 2,000, but it can potentially go up with the increased share of these unique grades.

Confirms the strong revival of the SSP segment, driven by DAP shortages and value-added products, with clear margin expectations and potential for improvement.

Asked by Nirav Jimudia

Decline in non-subsidy non-CP EBITDA Evasive
I don't know how you arrive at the math. All these are part of the Nutrient segment, both specialties as well as retail comes under the Nutrient segment and that has grown. Our retail stores have done extremely well on the volumes across categories and most stores have become profitable.

Analyst raised a concern about a specific segment's profitability, but management refuted the premise, suggesting a potential misunderstanding of financial categorization or calculation.

Asked by Prashant Biyani

Profitability and strategic value of Baobab Mining Direct
Yes. It should, with the cost structure once the volume improves. Currently, the cost structure is a little on the higher side because of the lower output, but when the output gets stabilized, we are highly confident that we'll be much more competitive. More than looking at the stand-alone profitability of Baobab, we look at the complete value chain of phosphoric as a value addition and also our ability to buy rock from other sources at a competitive price.

Provides clarity on the profitability outlook for Baobab Mining, emphasizing its strategic importance for backward integration and competitive raw material sourcing beyond standalone financials.

Asked by Arjun Khanna

Retail business turnover and scaling up plans Partial
As per the segmental, we don't put out the separate top line and profitability. But what I can say is that it has grown significantly. On Q3 alone, the top line growth is 20%. And in terms of bottom line growth, we have seen significant improvement... Absolutely. 810 stores... And you said we are looking at doubling it over 2 years to maybe 1,500 plus by FY '27? Sankarasubramanian: Correct.

Highlights the strong growth and profitability of the retail segment, along with ambitious plans to double the store count to over 1,500 by FY27, indicating significant expansion.

Asked by Arjun Khanna

Contribution of northern market expansion to volume growth Direct
The volumes, of ~3.1 lakh tons have come from north and central. If I have to compare the earlier year corresponding period, it was around 1.6 lakh. So we can say we have doubled our numbers as compared to last year corresponding quarter. This is a strategic call we have taken to ensure that we move to northern markets for our NP/NPK and position ourselves as a pan-India player in the fertilizer, especially phosphatic business.

Quantifies the significant contribution of northern market expansion to volume growth (doubled YoY), validating the strategy to establish a pan-India presence.

Asked by Somaiah

Savings from sulfuric acid backward integration Direct
On the value addition, what we get in terms of manufacturing sulfuric acid, we have two benefits, cost of production versus imported sulfuric acid as well as the power savings. I may not have an exact number for the quarter, but I can say roughly Rs. 180 crores is the 9 months benefit we have realized on account of sulfuric acid value addition.

Quantifies the substantial financial benefits (₹180 crores over 9 months) derived from backward integration in sulfuric acid, demonstrating improved operational efficiency and cost control.

Asked by Vignesh Iyer

3 min read 7 chapters

Detailed narrative

Strong Q3 Performance Driven by Volume Growth

Coromandel International reported a robust Q3 FY25, with consolidated total income increasing by 28% year-on-year to ₹7,049 crores. Net profit after tax for the quarter more than doubled to ₹508 crores from ₹228 crores in the prior year. This strong performance was primarily attributed to higher volumes across business segments and improved operational efficiencies, particularly in intermediate phosphoric acid and sulfuric acid production. The 9-month period also saw a 6% growth in total income to ₹19,330 crores.

Fertilizer Business Outperformance and Market Share Gains

The phosphatic fertilizer segment saw significant volume growth, with primary sales of NPKs rising 21% to 11.4 lakh tons in Q3. SSP also recorded a 29% quarterly volume growth, driven by value-added products like Gro Plus and urea SSP, which are gaining traction as DAP alternatives. The company's market share based on consumption for the 9-month period increased to 17% from 13% last year, indicating strong market penetration and acceptance of its product portfolio. The overall consumption of phosphatic fertilizers grew 6% to 20 million tons year-to-date.

Strategic Capacity Expansion and Backward Integration

Coromandel is actively pursuing several capacity expansion projects to bolster its manufacturing capabilities. The new phosphoric acid plant at Kakinada, with a capacity of 2 lakh tons, is progressing well and is expected to be commissioned by Q4 next year. Additionally, an investment in a 7.5 lakh tons NPK facility at Kakinada has been announced, with commercial production targeted from Q4 2027. A multi-product plant at Ankleshwar has also been approved and is slated for commissioning in 18 months, further strengthening the company's product offerings.

Baobab Mining Scale-up and Raw Material Security

The company's investment in Baobab Mining is progressing, with fixed processing plant operations stabilizing. Management expects to scale up volume to 3,00,000 tons next year and 5,00,000 tons the following year. This backward integration is crucial for securing rock phosphate requirements for the new phosphoric acid plant at Kakinada and ensuring competitive raw material sourcing. While the current cost structure is higher due to lower output, it is expected to become competitive once volumes improve.

Retail and Crop Protection Segment Growth

The retail business demonstrated strong growth, with a 20% increase in top line for Q3 and a 17% rise in profitability, reaching 810 stores. The company plans to double its retail store count to over 1,500 by FY27. In Crop Protection, the focus is shifting towards higher-value, new generation molecules and formulations, with the business seeing increased demand in both domestic (15% growth in formulation segment) and export markets (5% growth), particularly in Brazil. The company is also testing new products in plant extracts and microbial space, with many in final stages of approval.

Sulfuric Acid Value Addition and Forex Management

The commissioning of the new sulfuric acid plant has yielded significant benefits, with approximately ₹180 crores in savings realized over the 9-month period. These savings are attributed to reduced production costs and power savings, enhancing operational efficiency. The company maintains a prudent approach to hedging forex exposures, which helped limit the impact of currency depreciation, with the Indian Rupee depreciating from ₹83.79 to ₹85.68 against the US dollar during the quarter.

Government Support and Policy Landscape

Government policies continue to support the agricultural sector, including a special package of ₹3,500 per metric ton for DAP, extended beyond December 31st, and additional price compensation. Infrastructure strengthening initiatives like the Ken-Betwa River Linking Project, aiming to bring 3.5 million hectares under assured irrigation, and the Polavaram Project, which could add 1 million hectares in core markets, are expected to further benefit the agricultural sector and fertilizer demand.

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