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1 Q2FY19 Result Update Institutional Research October 3, 218 Coromandel International Limited Result Update Strong quarter; growth tosustain in Rabi season as well Coromandel International Ltd. (CRIN) reported net sales at INR 58 crore; up 98% QoQ and 37% QoQ. EBITDA reported by the company stood at INR crore; up 212% QoQ and 17% YoY. EBITDA margin during the quarter was 13% as against 8% last quarter and 16% same quarter previous year. EBIT during the quarter was INR 65 crore; up 23% QoQ and 16% YoY. Profit reported by the company stood at INR 366 crore; up 35% QoQ and 7% YoY. PAT margin during the quarter was 7% as against 4% previous quarter and 9% same quarter previous year. The performance during the quarter was driven by improved customer reach, marketing capabilities, differential product offerings, smart sourcing and efficient manufacturing. See our detailed report on Coromandel International Ltd. Highlights during the quarter: Phosphatic fertiliser business of CRIN has improved its market share and registered 28% YoY growth in sales volumes during Q2. Crop protection business registered YoY revenue growth of 14% during the quarter. They have introduced four new products in crop protection business during H1, including two in-house patented combination molecules. Further, the integration of Bio pesticide business has supported its expansion into complimentary product segments and geographies. They have introduced four differentiated products in water soluble fertiliser and value added Single Super Phosphate. Good Rabi season expected: Farmers have reason to cheer as the rabi harvest is expected to bring higher yields due to the delayed departure of the southwest monsoon. The rains will help all the rabi crops wheat, barley, oats and oilseed in some states like Punjab, Haryana, Uttar Pradesh and Rajasthan because moisture is expected to stay longer in the soil. As kharif crops are to go by the end of September, farmers expect bumper produce of rabi crop which starts from October. Also, good amount of water is expected to be available in this season. The 91 major reservoirs held 23% more water compared with last year and 5% more than the ten year average at billion cubic metres (BCM). The total live storage capacity of these 91 reservoirs is BCM which is about 63% of the total live storage capacity of BCM. Downside Scenario Industry STRONG BUY Current Price 395 Price Target 512 3% Market Data Upside Scenario Agrochemicals Sensex 34,67.4 Nifty 1, Bloomberg Code Face Value (INR) 1 CRIN:IN 52-w H/L 588/34 Market Cap (INR Crores) 11,547 Valuation Data FY18 FY19E FY2E P/E (x) EV/ EBITDA (x) Coromandel International Ltd. Vs SENSEX Coromandel Shareholding Pattern * Sensex Sep 18 Jun 18 Mar 18 Promoters FIIs DIIs Others/ Retail Thus, the live storage available in 91 reservoirs is 117% of the live storage of corresponding period of last year and 15% of storage of average of last ten years. Financial Snapshot (INR Crores) FY16 FY17 FY18 FY19E FY2E FY21E Net Revenues 11, ,3.8 1, , , ,159.5 YY -13% 9% 14% 7% 6% EBITDA , , , ,479.8 YY 28% 25% 38% 25% 17% PAT , ,461. YY 33% 39% 42% 31% 18% P/E EPS EV/ EBITDA D/E * Read last page for disclaimer & rating rationale Hubtown Solaris, NS Phadke Marg, Opp Teli Gali, Andheri East, Mumbai research@ www.

2 Coromandel International Ltd. Q2FY19 - Result Update Page 2 Kharif acreage up.61% YoY to 1,57.81 lakh hectare: Kharif crop planting has covered 1,57.81 lakh hectare from June to September 2, a.61% increase from 1,51.36 lakh hectares a year earlier. Rice, oilseeds and sugarcane saw the increase while pulses, coarse cereals and cotton saw the decline. The government has set a target of planting kharif crop on 1,58.1 lakh hectares this year. Rice planting saw a 2.36% increase over the previous year at lakh hectare. Higher acreage was reported from Telangana, Karnataka, Madhya Pradesh and Punjab. Planting of oilseeds, chiefly soyabean, sesamum and castor increased while groundnut and niger fell, taking total planting from the previous year to 3.1% increase at lakh hectare. Sugarcane, was planted on lakh hectares, up 4.17% from previous year. Area under cotton however was.89% lower at lakh hectares. The area of pulse cultivation dropped to 1.11% to lakh hectares. Major dip was seen in uradbean. In coarse cereals the planting fell by 3.92% to lakh hectare. All major cereals from jowar, bajra, ragi, small millets and maize saw the dip. (INR Crores) QoQ YoY Gross Sales % % Net Sales % % Total Expenditure % % EBITDA % % Margin 13% 8% 57.4% 16% -14.5% Other Income % % Depreciation % % EBIT % % Margin 13% 8% 66.6% 15% -15.6% Exceptional item Interest % % PBT % % Total Tax % % Reported Profit After Tax % % Margin 7% 4% 14.6% 9% -22.3% Improvement in Working Capital Cycle: Up till FY18 the working capital cycle was stretched due to high receivables. The receivable days stood at 51. In H1FY19 CRIN has already received INR 8 crore subsidy and another INR 65 crore in October, 218. This has caused the receivable days to come down to 38 days and we see the trend to continue going ahead. This will ease the working capital situation for CRIN. Valuation: Positive surprises in FY19 can be higher than expected fertiliser volume growth driven by: 1) timely subsidy receivables; 2) better rabi season; 3) shift towards complex fertiliser driving higher than industry volume growth and 4) increase in crop protection revenue share. We expect strong growth in speciality fertiliser / micro nutrients which can drive margin expansion. While FY18 saw improvement in P&L, FY19 is likely to see balance sheet improvement with reduction in working capital. Coromandel has been increasing the share of specialties and the export share of its crop protection segment is the highest among domestic agrochemical players. The company, however, still faces gross margin pressure due to the run up in raw material prices (phosphoric acid and ammonia). At CMP of INR 394.9, the company is trading at 6.3x FY2E EV/ EBITDA and 9.3x FY2E EPS. We value the company using average of EV/ EBITDA and P.E. multiple methodology. We have given an exit multiple of 8x for EV/EBITDA and 12x for PE to arrive at an average target price of INR 512 which is an upside of 3% Hubtown Solaris, NS Phadke Marg, Opp Teli Gali, Andheri East, Mumbai research@ www.

3 Coromandel International Ltd. Q2FY19 - Result Update Page 3 Conference call highlights: Phosphatic fertiliser business of CRIN has improved its market share and registered 28% YoY growth to 12.4 lac tonnes in Q2. Major share was unique grade which was 35%. During the quarter phosphatic fertilisers sales of 12.4 lac tonnes constitute 11.1 lac tonnes of own manufacturing and 1.3 lac tonnes of imports (mostly DAP). MOP sales were lower than usual as business utilise available raw materials to maximise fertiliser production. Urea sales up by 69% to 4 lac tonnes vs 2.4 lac tonnes last year The capacity utilisation for the quarter stood at 96% with 8.3 lac tonnes of phosphatic fertiliser manufactured. Phosphoric acid production for captive consumption at Vizag and Ennore was up by 3% during the quarter. The project to increase phosphoric acid manufacturing for captive consumption is on track and likely to be completed by 2 nd half of fiscal year 22. Crop protection numbers during the quarter were good, with good exports in the markets of South America and Africa. On manufacturing side, Mancozheb facility expansion at Dahej is on track and likely to be commissioned in Q4 FY19. The performance of retail segment was soft due to severe drought conditions in AP and Karnataka. On top of that cotton plant in Telengana did not do well. Total sales share from non fertiliser stood at 37% this quarter vs 42 % last year. Total subsidy received in H1 218stood at INR 8 crore and another amount of INR 65 crore received in October 218. Sales Volume Summary: Q2 & H1 (In Lakh tons) Q2 H1 FY17-18 FY18-19 FY17-18 FY18-19 Complex DAP Total Phosphatics Unique grade share 4% 43% 35% 39% Manufactured Phosphatics Imported Phosphatics SSP MOP Urea Hubtown Solaris, NS Phadke Marg, Opp Teli Gali, Andheri East, Mumbai research@ www.

4 E 22E 221E July, 17 Aug, 17 Sept, 17 Oct, 17 Nov, 17 Dec, 17 Jan, 18 Feb, 18 Mar, 18 Apr, 18 May, 18 June, 18 July, % 18.3% 2.3% 26.7% 3.2% 32.2% Prices in $ % INR Crores % INR Crores % Coromandel International Ltd. Q2FY19 - Result Update Page 4 QoQ Revenues (INR Crores) QoQ EBITDA & EBITDA Margin % 13.3% 11.9% 11.8% 1.8% 1.4% 6.6% 7.3% 7.7% 8.4% 6.1% 4.4% 18% 16% 14% 12% 1% 8% 6% 4% 2% % QoQ Revenues (INR Crores) EBITDA EBITDA Margin QoQ Margin comparison QoQ PAT & PAT Margin 18% 16% 14% 12% 1% 8% 6% 4% 2% % 15.6% 13.3% 11.9% 15.4% 11.8% 1.8% 1.4% 13.% 11.4% 1.6% 9.8% 11.3% 7.8% 6.1% 6.6% 7.3% 7.7% 8.4% 9.4% 3.8% 6.6% 4.4% 6.8% 7.4% 7.3% 3.% 6.% 6.3% 6.4% 6.1% 4.9% 3.2% 3.7% 3.6% 3.1%.4% % 6.3% 6.4% 6.% 3.% 3.1% 4.9% 3.7% 3.2%.4% 3.6% 7.3% 1% 9% 8% 7% 6% 5% 4% 3% 2% 1% % EBITDA Margin EBIT Margin PAT Margin PAT PAT Margin RoCE Raw Material Prices RoCE Urea Phos. Acid Rock Phos. Ammonia Sulphur QoQ segmentwise revenue in INR Crore Nutrients & Allied Business Crop Protection Hubtown Solaris, NS Phadke Marg, Opp Teli Gali, Andheri East, Mumbai research@ www.

5 Coromandel International Ltd. Q2FY19 - Result Update Page 5 Profit & Loss (INR crores) FY16 FY17 FY18 FY19E FY2E FY21E Net sales 11, ,3.75 1, , , , COGS 8, , , , , ,51.61 Employee Expenses Other Expenses 1, , , , , , EBITDA , , , , D&A Other income EBIT , , ,74.2 2, Interest Expense PBT ,9.39 1, , , Exceptional Items Tax Share of profit/ (loss) of joint ventures and associate PAT , ,46.98 EPS in INR Consolidated Balance Sheet (INR Crores) E 22E 221E EQUITY AND LIABILITIES Equity (a) Equity share capital (b) Other equity 2, , , , , , Equity attributable to owners of the Company 2, , , , , ,888.1 Non-current liabilities (a) Financial liabilities i) Borrowings ii) Other financial liabilities (b) Provisions (c) Deferred tax liabilities (net) (d) Other non-current liabilities Current liabilities (a) Financial liabilities i) Borrowings 2, , , , , ,65.43 ii) Trade payables 3, , , , , , iii) Other financial liabilities (b) Provisions (c) Current tax liabilities (net) (d) Other current liabilities Total liabilities 6, , ,447. 6, , ,122.9 Total equity and liabilities 9, ,645. 9, , , ,268.7 ASSETS Non-current assets (a) Property, plant and equipment 1, , , , , , (b) Capital work-in-progress (c) Goodwill (d) Other intangible assets (e) Intangible assets under development (f) Financial assets i) Investments a) Investments in joint ventures b) Other investments i) Other financial assets (g) Income tax assets (net) (h) Other non-current assets , , , , , , Current assets (a) Inventories 2, , , , , ,59.27 (b) Financial assets i) Investments ii) Trade receivables 1, , , , , ,745.7 iii) Government subsidies receivable 2, , , ,2.89 3, , iv) Cash and cash equivalents v) Bank balances other than cash and cash equivalents vi) Loans vii) Other financial assets (c) Other current assets , , ,65.1 8, , ,31.72 Total assets 9, ,645. 9, , , , Hubtown Solaris, NS Phadke Marg, Opp Teli Gali, Andheri East, Mumbai research@ www.

6 Coromandel International Ltd. Q2FY19 - Result Update Page 6 Cash Flow (INR Crores) FY16 FY17 FY18 FY19E FY2E FY21E PBT ,8.79 1, , ,22.65 Operating profit before working capital changes , , , , Operating profit after working capital changes , , , , Less income tax paid Cash Flow from Operating , , (Incr)/ Decr in Gross PP&E Cash Flow from Investing Cash Flow from Financing Incr/(Decr) in Balance Sheet Cash Cash at the Start of the Year Cash at the End of the Year RATIOS FY16 FY17 FY18 FY19E FY2E FY21E Profitability Return on Capital Employed (%) 14% 18% 2% 27% 3% 32% Return on Equity (%) 14% 16% 21% 26% 29% 3% Return on Assets (%) 4% 6% 7% 9% 11% 12% Margin Trend EBITDA Margin (%) 7% 1% 11% 14% 16% 18% Net profit Margin (%) 3% 5% 6% 8% 9% 1% Solvency Total Debt / Equity Valuation Ratios P/E P/B EV/ EBITDA Hubtown Solaris, NS Phadke Marg, Opp Teli Gali, Andheri East, Mumbai research@ www.

7 Coromandel International Ltd. Q2FY19 - Result Update Page 7 Coromandel International Ltd. Date CMP (INR) Target Price (INR) Recommendation October 3, Strong Buy October 12, 218 (Company Update) Strong Buy Rating Legend Strong Buy More than 15% Buy 5% - 15% Hold 5% Disclaimer: This report has been prepared by Nalanda Securities Pvt. Ltd( NSPL ) and published in accordance with the provisions of Regulation 18 of the Securities and Exchange Board of India (Research Analysts) Regulations, 214, for use by the recipient as information only and is not for circulation or public distribution. NSPL includes subsidiaries, group and associate companies, promoters, directors, employees and affiliates. This report is not to be altered, transmitted, reproduced, copied, redistributed, uploaded, published or made available to others, in any form, in whole or in part, for any purpose without prior written permission from NSPL. 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