Fertiliser maker Coromandel International on Monday reported a 15 percent year-on-year decrease in its net profit at Rs 246.4 crore for the fourth quarter (Q4FY23) that ended on March 31, 2023. It was Rs 290 crore in the same quarter a year ago. Revenue from operations during the fourth quarter rose 29.5 percent to Rs 5,475.8 crore, as against Rs 4,226.8 crore in the previous-year quarter.

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Jayashree Satagopan, President - Corporate & CFO, Coromandel International told CNBC-TV18 that the company has been seeing good margins and they are not sitting on any high cost inventory at this point in time.

She further added that the industry expects a reduction in subsidy rates from the government.

Also read: Coromandel International Q4 results: Net profit dips 15%; Rs 6 per share dividend announced

“Given the sharp reduction in the raw material prices that we have been witnessing over the past few months, we are expecting a reduction in the subsidy rates from the government. And this is likely to be done in two stages.

One as of first January 2023, and the other one first, April 2023. The NBS rates have not yet been announced and as management, we have taken our best estimates to factor in the reduction in subsidy rates and that probably is the reason for a slightly muted Q4 performance in terms of margins,” she added.

Additionally in February 2023, the Finance Minister of India, Nirmala

Sitharaman, revealed that the fertiliser subsidy for the current fiscal year has been raised to Rs 2.25 lakh crore, up from the budget estimate of Rs 1.05 lakh crore.

Looking at EBITDA per tonne of Rs 5,500-6,000 in FY24

She further mentioned that due to recent developments in the manufacturing facilities, they have to process multiple grades of raw material, the company expects to see higher EBITDA per tonne for FY 24.

“I think about Rs 5500-6000 per tonne would be a good number for us to look at on an annualised basis,” she added

Volume growth could be 5-10% in FY24

Coromandel International’s overall sale stood at Rs 5,475.8 crore in March 2023, up 29.5 percent on-year in volume terms. Satagopan added that the company’s overall sales volume has gone up by almost 10 percent. She Further mentioned that the volume growth could be anywhere between 5 to 10 percent depending upon how the season is going to come in for FY24.

Diversification plans

The Murugappa Group company announced in March that it has got Board approval to expand operations in crop protection chemicals, diversify into speciality and industrial chemicals and foray into contract development and manufacturing organisation (CDMO) business.

“We are looking into almost Rs 1,000 crore of investment that goes into diversification, setting up new multi-purpose plants primarily for the crop protection chemicals and also leveraging the competencies into speciality and industrial chemicals. We expect to see about Rs 2,000 to 3,000 crore of revenue to come from these assets over the next two to three year timeframe,” Satagopan added.

Also read: This analyst explains why he recommends buy calls on Axis Bank, NALCO, Balrampur Chini and Coromandel International