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With Remarkable Growth In Agri-sector, Buy This Fertilizer Stock For 40% Return: Motilal Oswal

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The agriculture sector has been a savior of the Indian economy, when the Covid pandemic hit the other key sectors like manufacturing, textile, tourism, etc. With this growth in Agri volume, the related industries too got scope to boom. Like Agri equipment, and fertilizers. Renowned brokerage firm Motilal Oswal in a recent report has recommended investors to buy stocks of Coromandel International with a potential upside of 40%, within a target period of 1 year.

 

Target Price

Target Price

The Current Market Price (CMP) of Coromandel International (CRIN) is Rs. 740. The brokerage firm, Motilal Oswal Recommends has estimated a Target Price for the stock at Rs. 1035. Hence the stock is expected to give a 40% return, in a Target Period of 1 year.

Stock Outlook
Current Market Price (CMP)Rs. 740
Target PriceRs. 1035
1 Year returns40.00%

Company performance
 

Company performance

CRIN's overall volumes in Oct-Nov'21 fell by 20% YoY due to a 78% fall in trading volumes, however, manufacturing volumes grew 12%. Growth in manufacturing volumes is aided by a favorable base in FY21. Additionally, total phosphatic fertilizer volumes grew 6% YoY in Oct-Nov'21 (on the back of a 6% YoY growth in Oct-Nov'20 and 8% YoY growth in the base quarter). The growth in phosphatic fertilizer volumes was on the back of 40% YoY growth in DAP volumes. However, the price hike in Phosphoric acid which accounts for 38-40% of CRIN's total raw material cost, is a challenge for the manufacturer.

Comments by Motilal Oswal

Comments by Motilal Oswal

According to Motilal Oswal, "Despite an increase in government subsidy, we expect CRIN's EBITDA margin to remain under pressure as the industry has not taken adequate price hikes due to government restrictions to adequately cover the increase in commodity cost...The structural story remains intact with regard to increasing awareness among farmers about having balanced nutrients in crops. This is likely to aid the shift to complex fertilizers from urea, of which CRIN would be a key beneficiary."

About the company

About the company

Coromandel International is an agri-solutions provider and India's largest private-sector phosphatic fertilizer company. They are also the world's largest neem-based bio-pesticide manufacturer, the number one organic fertilizer manufacturer; and we have the country's largest agri-retail chain with over 750 stores.

Disclaimer

Disclaimer

The above stock was picked from the brokerage report of Motilal Oswal. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.

(Also read: What Is A Focused Mutual Fund? Best Focused Mutual Funds: Risks And Benefits)

Story first published: Friday, December 17, 2021, 11:50 [IST]
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