Coromandel bets on backward integration to boost profitability

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Subscribe to enjoy similar stories. Despite a dull first half of FY25 (H1FY25), shareholders of Coromandel International are brimming with optimism. The fertiliser firm’s stock hit a new 52-week high of ₹1,882 on Wednesday, taking its returns so far this calendar year to 45%.

In his first interaction with analysts this week, managing director and CEO S Sankarasubramanian highlighted the increased thrust on cost-savings from backward integration. This would result in an increase of around 40% in Ebitda per tonne for manufactured fertilisers to around ₹7,000 by FY28 from the current guidance of ₹4,500-5,000 per tonne for FY25. In H1FY25, this metric stood at ₹4,800.

Also read: Dalmia Bharat on tough terrain as sector woes dim prospects The bulk of the gains are likely to come from captive manufacturing. The company is in the process of ramping up sulphuric acid and phosphoric acid capacities to 2000tpd and 650tpd at its plants in Kakinanda, which will be operational in FY25 and FY26. Management is upbeat on H2FY25 business prospects as the fertiliser business is expected to see healthy growth and better year-on-year margins.

Coromandel’s image has been that of a company dependent on subsidies from the government for fertilisers. It derived 72% of its Ebitda in H1FY25 from subsidy-dependent businesses. Management’s goal is to reduce this dependence and earn about half of its profit from non-subsidy businesses in the future.