Robust Domestic Agriculture And Green Diversification Will Drive New Markets

Key Takeaways

• Strategic integration and expansion into specialty, eco-friendly products position the company for improved margins and resilience against global price volatility.
  
• Geographic and segment diversification reduces market dependence, supporting sustainable revenue growth and higher profitability from premium and higher-margin businesses.
  
• Heavy subsidy reliance, volatile raw material sourcing, environmental shifts, ambitious expansion, and climate-related risks together threaten Coromandel's financial stability and long-term growth prospects.

Catalysts

Provides agriculture solutions in India and internationally.

• The strong outlook for domestic agriculture, underpinned by robust monsoon, rising crop acreage, improved reservoir levels, and significant government support through direct income transfer schemes and higher minimum support prices, is expected to drive demand for fertilizers and crop protection products, boosting revenue growth in the coming quarters.
  
• Coromandel's strategic backward integration initiatives-including ramping up captive rock phosphate sourcing through its Senegalese subsidiary and the commissioning of a new phosphoric/sulfuric acid plant-will help insulate the company from global input price volatility and enhance EBITDA margins over the medium to long term.
  
• Expansion into value-added, eco-friendly, and specialty products (specialty nutrients, bio products, nano fertilizers, drone-based solutions) aligns with accelerating farmer adoption of sustainable agricultural practices and premium input demand, setting the stage for higher-margin revenue mix and margin improvement.
  
• The company's accelerated geographic diversification into Central and Northern India, supported by capacity additions at Kakinada and a robust retail and e-commerce push, is set to reduce dependence on traditional markets and expand the overall revenue base, supporting long-term volume growth.
  
• The broadening of the Crop Protection segment, new product launches, portfolio diversification (including in-licensing and focus on exports), and upcoming NACL acquisition are likely to shift the earnings mix toward higher-margin businesses, aiding in net profit and return on capital enhancement over the next few years.

Coromandel International Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Coromandel International's revenue will grow by 9.0% annually over the next 3 years.
• Analysts assume that profit margins will increase from 8.6% today to 9.9% in 3 years time.
• Analysts expect earnings to reach ₹33.9 billion (and earnings per share of ₹109.66) by about September 2028, up from ₹22.6 billion today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 33.0x on those 2028 earnings, up from 30.7x today. This future PE is greater than the current PE for the IN Chemicals industry at 26.8x.
• Analysts expect the number of shares outstanding to grow by 0.08% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 13.47%, as per the Simply Wall St company report.

Coromandel International Future Earnings Per Share Growth

Risks

• Heavy dependence on subsidies (over 80% of revenue) and regulatory frameworks exposes Coromandel to significant policy risk; any long-term reduction or rationalization of government fertilizer subsidies could directly impact top-line revenue and net margins over time.
  
• Reliance on imported raw materials like phosphoric acid and sulfur (despite backward integration efforts) makes the company vulnerable to global supply chain disruptions, price spikes, and forex volatility, threatening cost stability and earnings predictability.
  
• The increasing adoption of sustainable and organic farming practices, along with rising environmental regulation and pressures to decarbonize agriculture, could structurally reduce long-term demand for traditional chemical fertilizers, impacting core revenue and market share.
  
• Expansion initiatives and aggressive CapEx, including acquisitions and new capacity in high-cost, low-return sectors, may increase the company's debt exposure and amplify execution risk, potentially compressing future EBITDA margins and return on capital if the demand outlook sours.
  
• Exposure to climate change-driven risks-such as erratic monsoons, rainfall distribution mismatches, and water scarcity-could cause volatility in agricultural output and cultivated acreage, leading to fluctuations in fertilizer demand and creating uncertainty in both short/long-term revenues.

Valuation

• The analysts have a consensus price target of ₹2595.545 for Coromandel International based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of ₹3187.0, and the most bearish reporting a price target of just ₹2100.0.
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be ₹341.5 billion, earnings will come to ₹33.9 billion, and it would be trading on a PE ratio of 33.0x, assuming you use a discount rate of 13.5%.
• Given the current share price of ₹2354.7, the analyst price target of ₹2595.55 is 9.3% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.