Coromandel International Limited — Q4 FY25 earnings call

Call held 2 May 2025

Management summary

Coromandel International delivered a strong Q4 and FY25, marked by robust revenue and EBITDA growth, particularly in Crop Protection and Retail. Strategic capacity expansions and the acquisition of NACL Industries are set to drive future growth, despite some raw material price volatility and NACL's current margin and debt challenges.

Highlights

  • Full Year Consolidated Total Income reached ₹24,444 crores, marking a 10% YoY growth.

  • Q4 Consolidated Total Income was ₹5,114 crores, a 28% increase YoY.

  • Q4 Consolidated EBITDA grew significantly by 56.04% to ₹426 crores, driven by volume growth and margin expansion in CPC.

  • Crop Protection business revenue increased 7% to ₹2,637 crores, and EBIT grew 25% to ₹365 crores.

  • The retail business expanded by over 130 Mana Gromor centers, with 99% of stores profitable and achieving breakeven within 6 months.

Concerns

  • NACL's operating margins have compressed from a historical 10-11% to 4-5% due to AI price contraction.

  • Sulfur and Sulfuric Acid prices spiked in Q4, impacting margins, though management expects moderation.

  • NACL carries high debt and interest costs, with no immediate timeline provided for its reduction post-acquisition.

Key financials

2 periods

Headline

  • Consolidated Total Income (FY)
    ₹24,444 Cr
    YoY +9.7%
  • Consolidated EBITDA (FY)
    ₹2,628 Cr
    YoY +9.5%
  • Subsidy Outstanding (Mar 31, 2025)
    ₹1,654 Cr

Q4

  • Consolidated Total Income
    ₹5,114 Cr
    YoY +28%
  • Consolidated EBITDA
    ₹426 Cr
    YoY +56%

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

  • Crop Protection Business (FY)
    ₹2,637 Cr Revenue₹365 Cr EBIT

Capital allocation

  • Dividend ₹9/share (final)
    The Board had approved a final dividend of Rs. 9 per share. This includes a normal final dividend of Rs. 6 per share and a one-time special dividend of Rs. 3 per share.
  • M&A NACL Industries Acquisition · Signed

    Position Coromandel as a leading player in Indian crop protection with a wide range of Technicals and pan-India presence, expanding scale, accelerating entry into contract manufacturing, and fast-tracking new product commercialization.

    NACL's operating margins have compressed from 10-11% to 4-5% due to AI price contraction, and it carries high debt and interest costs. Management aims to restore margins to 10-11%.

    During the year, the Coromandel signed a definitive agreement to acquire controlling stake in NACL Industries. ... NACL used to make margins in the range of 10% to 11% in the past, which came down to 4%, 5%. ... Our aim would be to first restore the margin back to 10% to 11%... So what is the timeline you expect to reduce the debt burden and interest cost in NACL?

Guidance & targets

M&A

  • NACL Acquisition Regulatory Approvals M&A · Q2 FY26 · High confidence Closure of transaction
    We expect the transaction closure and regulatory approvals to come through by Q2 of this year.

    — Sankarasubramanian S.

Profitability

  • NACL Operating Margin Restoration Profitability · Next few quarters/years · Medium confidence 10-11%

    From 4-5% today

    Our aim would be to first restore the margin back to 10% to 11%, get the capacities back on track, and try and see how we build this margin by adding new products in the portfolio.

    — Sankarasubramanian S.

  • Specialty Nutrients EBITDA Margin Profitability · Ongoing · High confidence 18-20%
    EBITDA margin is also quite healthy, between 18% to 20%, and we have been growing consistently in the top line in the last few years at 15% to 20%.

    — Sankarasubramanian S.

  • Manufactured EBITDA per ton Profitability · Ongoing · High confidence ₹5,000 per ton
    Yes, we should be able to sustain that margin [Rs. 5,000 per ton].

    — Sankarasubramanian S.

  • Non-subsidy Profitability Mix Profitability · Long term · Medium confidence 50:50

    From 70:30 today

    Currently I think it's around 70:30, on the subsidy and non-subsidy share on the profitability. ... Ideally, we want to put the number 50:50 but not at the cost of slowing down on fertilizers.

    — Sankarasubramanian S.

Revenue

  • Crop Protection Revenue Growth Revenue · FY26 · High confidence High-end, double-digit growth
    I would suggest we should look at high-end, double-digit growth for the next year across these three segments, domestic formulation, domestic B2B, and exports market.

    — Sankarasubramanian S.

Capacity

  • Fertilizer Intermediate Capacity Commissioning (Kakinada) Capacity · Q4 FY26 · High confidence Commissioned
    The major backward integration projects for Phosphoric Acid and sulfuric acid plants at Kakinada are on track and are expected to be commissioned in the current Financial Year 25-26.

    — Sankarasubramanian S.

  • Fertilizer Intermediate Capacity Full Operation Capacity · FY27 · High confidence Rated capacity achieved
    full play to come in in the next year 26-27 because we will be stabilizing our production in the fourth quarter of the current year, which means next year will be the full year of operation. Our aim would be to achieve the rated capacity for phosphoric acid and sulfuric acid plants.

    — Sankarasubramanian S.

  • Granulation Plant Commissioning (Kakinada) Capacity · Q3/Q4 FY27 · High confidence On stream
    In the case of granulation plant, it will get commissioned in the third or fourth quarter of 26-27.

    — Sankarasubramanian S.

Volume

  • Nano DAP Replacement of DAP Volume · Next 2-3 years · Medium confidence 2 million tons
    If everything happens in the way we expect, we do expect the replacement of 2 million tons of DAP in another two- or three years' time.

    — Sankarasubramanian S.

Market Share

  • Retail Footprint Expansion Market Share · Next 2-3 years · High confidence 3x current numbers
    I am sure for the next two to three years we are confident that we should be able to increase the footprint to 3 times the numbers what we have.

    — Sankarasubramanian S.

What to watch in Q1 FY26

NACL Acquisition Regulatory Approvals

Q2 FY26
Current Pending
Target Closure of transaction

Why it matters

Essential for integrating NACL and realizing synergies, impacting the overall crop protection segment's performance.

We expect the transaction closure and regulatory approvals to come through by Q2 of this year.

Risks & concerns

  • Raw Material Price Volatility

    medium

    Sulfur, sulfuric acid, and phosphoric acid prices spiked in Q4, though management expects moderation in coming quarters due to global surplus.

    Management acknowledged

  • NACL Margin Compression

    medium

    NACL's operating margins have compressed from 10-11% to 4-5% due to active ingredient (AI) price contraction, which management aims to restore.

    Management acknowledged

  • NACL High Debt and Interest Costs

    medium

    NACL carries high debt and interest costs, which Coromandel plans to address through working capital control, but without a specific timeline for reduction.

    Management acknowledged

Q&A highlights

6 direct
NACL Turnaround Strategy Partial
Our aim would be to continue what they have been doing well and try and see how we restore the margins before we look at introducing new molecules and new products. They do have spare capacity which can be leveraged.

Analyst sought clarity on the strategy for improving NACL's performance post-acquisition, given its recent underperformance.

Asked by Prashant Biyani

Capex Plans Post-NACL Acquisition Direct
No, I would not say it will be trimmed. It will be moderated because the active ingredient capacity creation can be slowed down since we have spare capacities which can be leveraged.

Analyst questioned if existing capex plans would be cut due to the NACL acquisition, which management clarified would be moderated by leveraging NACL's assets.

Asked by Prashant Biyani

Ma'aden Fertilizer Import Volumes Direct
Right now, the contract is for 300,000 tons and we can potentially go up to 0.5 million tons. Our aim would be to see how much we can enhance our DAP imports from Ma'aden over a long period, so that will help us to maximize our NPK production in our existing facilities.

Analyst inquired about the scale of the long-term supply agreement with Ma'aden, providing insight into raw material sourcing strategy.

Asked by Prashant Biyani

NACL Long-Term Vision and Potential Merger Direct
No, there is no such plan. At this point of time, currently we are trying to run NACL as such, and we will achieve the targets what we set ourselves at the time of acquisition. ... Both will leverage the synergies but will continue to operate this way.

Analyst probed on the strategic direction for NACL and whether a merger with Coromandel's crop protection division was planned, which management denied for now.

Asked by Rahul Jain

Nano DAP Market Traction and Global Potential Direct
I am pretty confident that this product definitely will scale up in the coming years. ... We do expect the replacement of 2 million tons of DAP in another two- or three years' time. ... We also find that there is a positive response from various countries for this product and we have taken Government of India approval to export this as well.

Analyst sought detailed insights into the market acceptance and future growth prospects of Nano DAP, a key new product.

Asked by Naushad Chaudhary

Retail Business Economics and Expansion Strategy Direct
The retail has been a pretty good growth story for us. In fact, more than 90%, 95% of the retail stores, are in the profit zone now, we have added another 130. ... I am sure for the next two to three years we are confident that we should be able to increase the footprint to 3 times the numbers what we have.

Analyst questioned the financial viability and expansion plans for the retail segment, which management detailed as highly profitable and set for significant growth.

Asked by Naushad Chaudhary

NACL Margin Compression and Outlook Direct
NACL used to make margins in the range of 10% to 11% in the past, which came down to 4%, 5%. Our aim would be to first restore the margin back to 10% to 11%, get the capacities back on track, and try and see how we build this margin by adding new products in the portfolio.

Analyst challenged the low operating margins of NACL, prompting management to explain the reasons and outline the strategy for margin recovery.

Asked by Viraj Kacharia

NACL Debt Reduction Timeline Partial
At this point, on a standalone basis, it is difficult to put the timelines. But our effort would be to see they have good control over the working capital, release the cash to pay off the debt and bring down the interest cost.

Analyst pressed for a timeline on reducing NACL's high debt, which management acknowledged as a focus but could not provide a specific timeline for.

Asked by S. Ramesh

3 min read 7 chapters

Detailed narrative

Positive Agricultural Environment and Policy Support

India experienced a positive agricultural environment in 2024-25, with food grain production estimated at 331 million tons, an increase of close to 5% over the last year. Gross value added in Agriculture and allied activities is projected to grow by 4.6%. Government policies, including a 42% increase in P rate subsidy for 25-26 and a special package of ₹3,500 per metric ton on DAP until September 2025, are expected to support the sector.

Strong Financial Performance in Q4 and FY25

Coromandel International reported a consolidated total income of ₹5,114 crores for Q4 FY25, a 28% increase YoY, and ₹24,444 crores for the full year, up 10% YoY. Consolidated EBITDA for Q4 was ₹426 crores, surging by 56.04% YoY, while full-year EBITDA reached ₹2,628 crores, up 9.54% YoY. This growth was primarily driven by volume increases across all businesses and margin expansion in the Crop Protection segment.

Strategic Capacity Expansion and Backward Integration

The company achieved its highest ever volume of 33.3 lakh tons. Backward integration projects for Phosphoric Acid and Sulfuric Acid plants at Kakinada are 45% complete and on track for commissioning in Q4 FY26. Additionally, a brownfield granulation train at Kakinada has been initiated, expected to come on stream in FY27. The Ennore unit's phosphoric acid and sulfuric acid plants resumed operations, contributing to a 6% increase in Phos Acid production for the year.

Crop Protection and Retail Business Growth Drivers

The Crop Protection business saw its revenue grow by 7% to ₹2,637 crores and EBIT by 25% to ₹365 crores, with new products contributing 21% to formulations sales. The retail segment expanded its footprint by adding over 130 Mana Gromor centers, achieving 99% store profitability and a breakeven period of 6 months. Management aims to triple the retail footprint within the next 2-3 years, leveraging digital analytics and high-margin product introductions.

NACL Industries Acquisition and Synergy Potential

Coromandel signed a definitive agreement to acquire a controlling stake in NACL Industries, with regulatory approvals anticipated by Q2 FY26. The acquisition aims to position Coromandel as a leading player in the Indian crop protection sector. Management plans to restore NACL's operating margins from the current 4-5% (down from a historical 10-11% due to AI price contraction) by focusing on procurement efficiencies, increasing production, and synergizing R&D capabilities.

Nano DAP and Specialty Nutrients Performance

The Nano DAP business marketed 26 lakh bottles, achieving an 80-90% liquidation rate and a 33% market share. Management is confident in its potential to replace 2 million tons of DAP in 2-3 years and is exploring export opportunities. The Specialty Nutrients business continued its consistent growth of 15-20% annually, maintaining healthy EBITDA margins of 18-20%, and is focusing on backward integration for key imported raw materials.

Raw Material Price Dynamics and Subsidy Management

The company faced raw material price volatility, with phosphoric acid prices increasing by $98/ton to $1,153/ton in Q1, and sulfur prices spiking from $180 to over $300/ton in Q4. While these spikes impacted Q4 margins, management expects sulfur and sulfuric acid prices to moderate in coming quarters. Subsidy outstanding as of March 31, 2025, stood at ₹1,654 crores, with the government being prompt in clearing dues.

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