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Strong 1QFY26 lays solid foundation for FY26

Operating performance in line with estimates

* Coromandel International (CRIN) continued to deliver strong operating performance in 1QFY26 (EBIT up 50% YoY), supported by continued traction in crop protection (EBIT up 77% YoY) and nutrients and allied (EBIT up 46% YoY). Margin expansion was driven by higher manufactured volumes (up 12% YoY), procurement efficiencies, operating leverage, and effective marketing initiatives.

* We expect this momentum to sustain, driven by a favorable agricultural scenario with above-normal monsoon. Moreover, rising demand for crop protection, along with easing global agrochemical channel inventories, is expected to support segment growth. Management’s focus on capacity expansion and the introduction of new molecules in the crop protection segment is expected to reinforce growth going forward.

* We largely maintain our FY26 earnings estimates but raise our FY27 estimates by 6%, driven by enhanced backward integration through an increase in phosphoric acid capacity in FY27. We value the company at ~30x FY27E EPS to arrive at a TP of INR2,930. Reiterate BUY

Strong performance across each segment drives profitability

* CRIN reported total revenue of INR70.4b (est. INR62b) in 1QFY26, up 49% YoY, led by higher sales volume. Total manufacturing fertilizer volumes (NPK+DAP) grew 10% YoY to ~0.9mmt and total phosphate fertilizer manufacturing volumes (including SSP) rose 12% YoY to 1.08mmt.

* Nutrient & other allied business revenue rose 51% YoY to INR63.5b, while crop protection business revenue grew 31% YoY to INR7.2b.

* EBITDA surged 55% YoY to INR7.8b (est. in-line). According to our calculations, manufacturing EBITDA/mt (including SSP) stood at INR5,118 (up 20% YoY), while EBITDA/mt for phosphate fertilizers (DAP and NPK) stood at INR5,937 (up 23% YoY).

* EBIT margin for the nutrient & other allied business contracted 30bp YoY to 9.9%, while EBIT margin for the crop protection business expanded ~400bp YoY to 15.3%.

* Adjusted PAT stood at INR5b (est. in line), up 62% YoY.

Highlights from the management commentary

* Baobab Mining and Chemicals Corporation SA, Senegal (BMCC): The Board of Directors approved the acquisition of an additional 17.69% stake, increasing overall shareholding in BMCC to 71.51% through its wholly-owned subsidiary. This strategic move is aimed at further strengthening backward integration in the phosphates value chain. BMCC, based in Senegal, is primarily engaged in the mining and production of rock phosphate

* Subsidy: During the quarter, CRIN received INR13b in subsidy claims, compared to INR9.87b in 1QFY25. As of Jun’25, outstanding subsidies stood at ~INR29.1b compared to INR19.7b as of Jun’24.

* Capacity expansion: Backward integration projects for the phosphoric and sulphuric acid plants at Kakinada are progressing well, with commissioning expected by 4QFY26. Additionally, the company has initiated preliminary work on a 750,000-ton fertilizer granulation facility at Kakinada, targeted to commence operations by CY28.

Valuation and view

* We believe the company is well-positioned to sustain its growth momentum in FY26, supported by favorable market dynamics, a continued decline in global agrochemical channel inventory, and an increasing shift toward NPK fertilizers.

* CRIN’s longer-term outlook is further backed by: 1) continuous backward integration for the fertilizer business; 2) product innovation and diversification; 3) differentiated and unique grades; and 4) expansion into new geographies.

* We largely maintain our FY26 earnings estimates but raise our FY27 estimates by 6%. We expect a CAGR of ~16%/23%/26% in revenue/EBITDA/adj. PAT over FY25- 27. We value CRIN at ~30x FY27E EPS to arrive at our TP of INR2,930. Reiterate BUY.

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