Coromandel International Limited

Coromandel International reported a total income of INR 8,863 crores for Q3 FY26, marking a 26% YoY growth. Consolidated EBITDA increased by 11.49% to INR 805 crores, up from INR 722 crores in the prior year. However, Net Profit After Tax saw a slight decline of 3.94% to INR 488 crores compared to INR 508 crores in Q3 FY25, primarily due to rising raw material costs and currency depreciation.

The fertilizer industry faced a challenging quarter with overall consumption down 7% due to unseasonal rains and delayed monsoon. Despite this, Coromandel achieved its highest-ever quarterly fertilizer production of 9.9 lakh tons, an 18% increase YoY. The company's consumption-based market share moderated to 14% from 15% last year, mainly attributed to a slowdown in key states like Andhra and Telangana where crop acreages were impacted.

The Crop Protection & Bio business delivered a strong performance, with standalone revenue growing 24% to INR 785 crores and EBIT surging 74% to INR 158 crores, improving the margin to 20% from 14% last year. This growth was driven by a 32% increase in exports and a 36% rise in domestic B2B, supported by new product launches and expanded Mancozeb capacity. The company plans to further expand Mancozeb capacity by another 30%.

Coromandel is actively pursuing several strategic projects to enhance efficiency and reduce costs. The backward integration projects for sulfuric acid and phosphoric acid at Kakinada, involving an investment of INR 1,200 crores, are on track for commissioning this quarter (Q3 FY26) and are expected to yield an EBITDA benefit of INR 400 crores annually. Additionally, the granulation train expansion is slated for commissioning in Q3 FY27, and a new MAP water-soluble fertilizer plant has commenced activity at Vizag.

The subsidiary NACL Industries experienced a tough quarter, with lower margins attributed to domestic B2C sales and underutilized capacity at its Dahej facility. However, post-acquisition, NACL has initiated cost reduction measures and product introductions, improving its EBITDA to 9-10%. Management expects further improvements from Q1 FY27 as integration synergies are realized and capacity utilization issues are addressed, with proceeds from a rights issue used to retire high-cost debt.

The quarter saw firming raw material prices, with Sulphur reaching $550 and Phos Acid increasing to $1,290. The rupee also depreciated by 7% year-to-date, impacting costs. While these factors pressured margins, management believes the INR 5,500-6,500/ton EBITDA target for the phos acid plant remains achievable. Subsidy collections were robust at INR 2,571 crores for Q3, though outstanding subsidy increased to INR 3,785 crores as of December.