When asked, “Beta mann me dusra laddoo phoota?” (To feel ecstatic joy). This is a well-known phrase from the marketing for the Mondelez-owned Cadbury Dairymilk Shots.
The saying “Man mein laddoo phootna” refers to being overjoyed following an event. The company advertised two chocolate balls each packet, therefore the ad creators turned the proverb on its head and utilised the aforementioned tagline to represent yet another joyful event.
The status of investors in Coromandel International is summarised in the aforementioned tagline.
A major announcement was just made by the fertiliser firm.
Coromandel International is expanding…
The Murugappa organisation includes Coromandel International. Its administrative centre is in Hyderabad, Telangana. The company, which was once known as Coromandel Fertilisers, deals in fertilisers, insecticides, and speciality nutrients.
One of the top providers of agricultural solutions in India, it offers a wide variety of goods and services. In an important business segment, the corporation has a sizable market share.
India is an agricultural nation. Agriculture accounts for more than 50% of all employment in India. India is also the nation with the largest population on earth. As a result, India has a social and economic need for a strong agriculture industry.
A healthy agriculture industry results in higher-quality agricultural products being produced at a faster rate, as well as higher wages for those working in the industry. It doesn’t take Sherlock Holmes to realise that the fertiliser industry has a chance to thrive if the agricultural sector is expanding.
It appears that Coromandel International is maximising this chance. With a market share of roughly 17.9% as of September 2022, the firm was the market leader in the phosphatic fertiliser and super phosphate sectors.
It had invested 2.8 billion (bn) in capex in 2022 and intends to invest about 9 bn in the fiscal years 2023 and 2024. It intends to keep its debt-free status despite such high capital expenditures.
In addition to a significant capex plan, it introduced nine new items in 2022.
The business has demonstrated a respectable financial performance during the previous five years. Due to the company’s strong retail presence, which includes more than 750 stores, sales has increased at a compound annual growth rate (CAGR) of 11.6% over the past five years.
Due to captive production of phosphoric acid, a crucial input, and established connections with the suppliers, the net profit increased 17.1% on a CAGR basis.
A major announcement was just made by the fertiliser firm.
Coromandel International is expanding…
The Murugappa organisation includes Coromandel International. Its administrative centre is in Hyderabad, Telangana. The company, which was once known as Coromandel Fertilisers, deals in fertilisers, insecticides, and speciality nutrients.
One of the top providers of agricultural solutions in India, it offers a wide variety of goods and services. In an important business segment, the corporation has a sizable market share.
India is an agricultural nation. Agriculture accounts for more than 50% of all employment in India. India is also the nation with the largest population on earth. As a result, India has a social and economic need for a strong agriculture industry.
A healthy agriculture industry results in higher-quality agricultural products being produced at a faster rate, as well as higher wages for those working in the industry. It doesn’t take Sherlock Holmes to realise that the fertiliser industry has a chance to thrive if the agricultural sector is expanding.
It appears that Coromandel International is maximising this chance. With a market share of roughly 17.9% as of September 2022, the firm was the market leader in the phosphatic fertiliser and super phosphate sectors.
It had invested 2.8 billion (bn) in capex in 2022 and intends to invest about 9 bn in the fiscal years 2023 and 2024. It intends to keep its debt-free status despite such high capital expenditures.
In addition to a significant capex plan, it introduced nine new items in 2022.
The business has demonstrated a respectable financial performance during the previous five years. Due to the company’s strong retail presence, which includes more than 750 stores, sales has increased at a compound annual growth rate (CAGR) of 11.6% over the past five years.
Due to captive production of phosphoric acid, a crucial input, and established connections with the suppliers, the net profit increased 17.1% on a CAGR basis.
The company recorded total revenues of 83,492 million (m) for the quarter that ended on December 31, 2022, a strong increase of 64% YoY. In the same time frame, its profit increased by 41%.
The business not only did well financially, but it also lavishly compensated its shareholders. During the fiscal year that ended in March 2022, a dividend of 1,200% in the amount of $12 per share was paid.
On February 2, 2023, the business additionally declared an interim dividend of 6. It has distributed an average dividend of nine during the last five years.
Even FIIs have raised their position in the company over the past three quarters as a result of the company’s promising growth prospects and respectable financial results. The overall amount of FII ownership in the corporation as of December 31, 2022, was 10.3%.
In addition to embracing new technology, the corporation has seen the potential in agri-tech. To introduce the first of its type “drone-as-a-service,” the corporation invested in a drone-based startup.
All of these demonstrate the company’s efforts to dominate the fertiliser market.
The share price chart also illustrates the efforts. Its share price increased by 63.7% over the previous five years.
entering the speciality chemical market
The company declared on March 22, 2023, that the plan to increase operations for crop protection chemicals and enter the contract development and manufacturing organisation (CDMO) market had been accepted by the board of directors.
The board also gave the go-ahead to expand into new growth markets like industrial and speciality chemicals.
The company will use its strong technological capabilities and best-in-class infrastructure to engage into new business channels in addition to increasing its market share in its current business.
The company intends to utilise the macro tailwinds in the speciality chemical sector and spend $10 billion (bn) over the next two years in the aforementioned businesses in order to create a scaled operation, according to the announcement.
How this venture will assist Coromandel in maximising its prospects…
With its foray into the CDMO market, it can make use of both its excellent development capabilities across a range of chemistries and its experience managing complicated chemistries on a commercial scale.
Because of the growing need for improved medications, pharmaceutical companies are becoming more ready to outsource drug development to CDMOs. Indian CDMOs will soon aim to provide complete product development, scale-up, and regulatory approval solutions as well as rapidly generate new, attractive products.
All phases of the new product’s research and development, from ideation to high-volume manufacture, will be handled by CDMOs that form marketing agreements with powerful, branded generic corporations.
The company’s present crop protection chemical capabilities give it a solid starting point and the flexibility to participate in the production of specialised and industrial chemicals.
These companies have excellent development potential thanks to trends towards global supply chain diversification and a strong push for policy reform from the government.
Inadvertently, Covid-19 was a boon for the Indian speciality chemical industry. In the US$ 800 billion (about 658.8 billion) worldwide speciality chemical business, China holds a 20% market share. however, due to stern lockdown guidelines in
India became the focus after China.
India is the sixth-largest producer of chemicals. India was a desirable investment due to its low production costs, inexpensive labour, and track record of creating goods of top quality.
In addition, India may take advantage of economies of scale because to its close proximity to the Middle East, which is the greatest stockpile of petrochemicals in the world.
How lately has the share price of Coromandel International fared?
Coromandel shares are down 2% so far in 2023. Coromandel International has increased by 10.8% during the past year.
A 52-week high of $1,094.4 was reached by Coromandel International on September 1, 2022, and a 52-week low of $779.8 was reached on March 28, 2022.
If speciality chemical stocks are of interest to you, watch this video in which chartist Brijesh Bhatia discusses his perspective on the industry.
Disclaimer: This content is provided solely for informational reasons. It should not be seen as a stock recommendation because it is not one.