Coromandel Inter

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.

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.

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.

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.

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.

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 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.