01 — At a Glance
The Murugappa Group’s Quiet Cash Engine Hits Turbulence. Then Buys More Assets.
- 52-Week High / Low₹2,720 / ₹1,700
- FY26 Revenue (TTM)₹30,464 Cr
- FY25 PAT (Full Year)₹2,055 Cr
- Full-Year EPS (FY25)₹70.14
- TTM EPS₹81.26
- Book Value₹413
- Price to Book4.90x
- Dividend Yield0.59%
- Debt / Equity0.12x
- Working Capital Cycle-7 days
The Auditor’s Roast: Coromandel finished FY25 with ₹24,085 crore revenue (+9.2% YoY), ₹2,055 crore PAT, a fortress balance sheet (net cash of ₹450 cr post-acquisition), and a CRISIL AAA rating — the kind of report card that gets framed. Yet the stock dropped 12.6% in three months. Meanwhile, they acquired 53% of NACL Industries (a crop-protection peer) for ₹820 crore mid-way through the fiscal, integrated it into the P&L, and still managed profitable results. This is not a “buy-and-hope” story. This is “buy-execute-ignore-the-market” territory.
02 — Introduction
The Fertilizer Story Your Portfolio Manager Will Never Pitchbooking About
Let’s be direct: Coromandel International is a fertilizer company. That’s it. That’s the whole pitch. No AI, no cloud, no SaaS, no venture bets that return 100x (actually, they did acquire drones via Dhaksha, but more on that later). The company sells phosphate-based complex fertilizers, single super phosphate, urea, crop protection chemicals, and bioproducts to Indian farmers and exports to 80+ countries. It owns rock phosphate mines in Senegal. It has backward-integrated acid plants in Visakhapatnam and is commissioning another in Kakinada. It owns ~1,000 retail outlets across India and ties into 14,000+ dealers. In the three months to December 2025, it made ₹488 crore profit on ₹8,779 crore of revenue, and the market yawned.
Revenue hit a record high. ROCE of 23.2% — highest among peers. Working capital is negative (that’s farming gold — you collect cash before you pay suppliers). But the P/E is 28.1x — nearly double the Nifty 50 — because the market has priced in permanent high growth (spoiler: fertilizer growth is mid-to-single digit) or permanent subsidy dysfunction (spoiler: the government always coughs up). The stock has returned +15.2% annually over one year and +30% over three years, but on an absolute basis, it’s a dividend compounding story dressed as a growth play.
Q3 FY26 was “very challenging,” per management’s own concall. Southwest monsoon withdrawal caused crop damage. Input costs spiked. INR depreciated ~7% YTD. And yet the company posted record quarterly fertilizer production (9.9 lakh tons), expanded mancozeb capacity (a key export molecule), and completed the largest acquisition in the crop-protection space. Most companies would issue a stress memo. Coromandel issued an interim dividend.
Concall Signal (Feb 2026): Management flagged “late withdrawal of Southwest monsoon” hitting crop damage in pockets. Yet Q3 was “record quarterly fertilizer production.” Translation: when demand is weak, you still maximize utilization. When input costs spike, you price and shift mix. This is operational discipline. Not exciting, but effective.
03 — Business Model: What Do They Actually Sell?
Rocks, Sulphur, Ammonia. Plants. Dealers. Farmers. Subsidy. Rinse. Repeat.
The core business is deceptively simple. Indian farmers need fertilizers. The government subsidizes ~60-75% of the cost. Coromandel manufactures complex fertilizers (DAP, NPK), single super phosphate, and specialty nutrients; sources rock phosphate (40-50% imported, 20-25% from their own Senegal mine), phosphoric acid (~50% captive), and sulphuric acid (~60% captive); mixes and granulates at three plants; and distributes through 1,000 retail outlets and 14,000+ dealers. The company holds ~51% market share in DAP+NPK consumption, the highest in SSP (~15%), and leads in every segment it touches. This is not market leadership. This is market domination. Rivals exist to occupy the footnotes.
The second leg is crop protection — insecticides, fungicides, herbicides, biopesticides. The company became India’s third-largest mancozeb player globally and exports to 80+ countries, particularly Latin America and Southeast Asia. This segment contributes ~11% of revenue (fertilizers ~89%) but runs at meaningfully higher EBIT margins (~20% in Q3 vs 12% for fertilizers). In August 2025, Coromandel acquired 53% of NACL Industries, a crop-protection formulator and technicals player, for ₹820 crore. NACL adds scale, customer relationships, and manufacturing footprint. It was also struggling (low utilization at the Dahej plant, weak domestic B2C), so there’s turnaround upside.
Beyond core, the company plays in specialty nutrients (micronutrients, water-soluble fertilizers), organic fertilizers, Nano-DAP (patented), bioproducts (azadirachtin-based biopesticides, where they claim 65% of global azadirachtin exports), and adjacencies like drone spraying via Dhaksha Unmanned Systems (58% stake) and retail services. Non-subsidy businesses now target 30% of revenue by FY27; currently at ~18%.
Market Share (DAP/NPK)51%Consumption-based FY25
Market Share (SSP)15%Largest single SSP player
ROCE23.2%Best-in-class. Literally.
Subsidy / Revenue82%Q3 FY26
The Subsidy Dependency Elephant: Coromandel collects 82% of its revenue as government-subsidized fertilizer sales. This means profitability is a function of (1) NBS (Nutrient Based Subsidy) rates set by the government every six months, (2) raw material prices, and (3) operational efficiency. Management argues non-subsidy businesses are growing as a hedge. Fair point. But today, if the government lowers NBS by 10%, earnings compress by ~30%. You’ve been warned.
💬 Quick thought: Do you think the fertilizer subsidy system will survive another 10 years? Or will the government privatize/reduce support as India moves to precision agri?
04 — Financials Overview
Q3 FY26: The Numbers (Quarterly Results)
Result type: Quarterly Results | Q3 FY26 EPS: ₹17.15 | Annualised EPS (Q3×4): ₹68.60 | Full-year FY25 EPS: ₹70.14 | TTM EPS: ₹81.26
| Metric (₹ Cr) |
Q3 FY26
Dec 2025 |
Q3 FY25
Dec 2024 |
Q2 FY26
Sep 2025 |
YoY % |
QoQ % |
| Revenue | 8,779 | 6,935 | 9,654 | +26.6% | -9.1% |
| Operating Profit | 800 | 713 | 1,147 | +12.2% | -30.3% |
| OPM % | 9% | 10% | 12% | -100 bps | -300 bps |
| PAT | 488 | 508 | 793 | -3.9% | -38.5% |
| EPS (₹) | 17.15 | 17.37 | 27.31 | -1.27% | -37.2% |
The Margin Squeeze Story: Revenue +26.6% YoY but PAT flat-to-negative. OPM compressed from 10% to 9% YoY. Why? Phosphoric acid spiked to $1,290/MT, sulphur jumped to ~$550 (China LFP demand, Indonesia nickel refining, Russia disruptions), ammonia outages, INR depreciation ~7% YTD. Management took 3-4% price corrections and shifted mix to unique grades (36% of DAP sales in Q3 vs 33% prior), but couldn’t fully offset input cost inflation. This is the subsidy trap: when input costs rise faster than NBS rates adjust, margins compress. Management still guided annual fertilizer EBITDA/ton at ₹5,000-5,500, with upside to ₹6,500/ton post-Kakinada backward integration (end-FY27).
9M FY26 Performance: Total income ₹25,759 crore (+33% YoY; includes acquisition impact). EBITDA ₹2,738 crore (+24% YoY). PAT ₹1,784 crore (-4.2% YoY; includes NACL integration drag). Subsidy collections ₹7,208 crore (+22% YoY). Subsidy outstanding ballooned to ₹3,785 crore (vs ₹2,095 crore YoY), but ₹1,300 crore collected post-quarter (covers sales through late Dec), so cash flow is normalizing. The working capital story is clean — negative 7-day cycle means farmers pay faster than suppliers.
05 — Valuation: The P/E Premium Is Unjustifiable or Perfectly Rational (Pick One)
What’s This Company Worth? And Why Is It Trading Expensive?
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