- EBITDA rose 11% YoY in Q3 FY26, driven by a 47% jump in crop‑protection earnings.
- Sulphur price normalization and backward integration are expected to cushion fertilizer margins.
- Motilal Oswal trimmed FY26 earnings forecasts by 7% but kept FY27‑FY28 targets unchanged.
- Valuation anchored at ~25× FY28E EPS translates to a target price of INR 2,800 – a BUY recommendation.
- Sector peers like Tata Chemicals and Adani Enterprises are reacting differently, creating a relative‑value opportunity.
You’re missing the fertilizer sector’s fastest‑growing profit engine – Coromandel International.
While most market chatter fixates on macro‑level commodity swings, the real story is hidden in the numbers: an 11% year‑on‑year EBITDA lift and a staggering 47% surge in crop‑protection earnings. If you’re looking for a high‑conviction play that blends robust fundamentals with a compelling valuation, this is the stock that should be at the top of your watchlist.
Coromandel International's EBITDA Surge Beats Sector Trends
EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) is a clean‑room metric that strips out financing and accounting noise, giving investors a clearer view of operational cash generation. In Q3 FY26, Coromandel’s EBITDA climbed 11% YoY, outpacing the broader fertilizer industry, which is expected to grow at a modest 3‑5% pace.
The lift stems from two sources: a rebound in crop‑protection sales and incremental efficiencies from its integrated supply chain. The 47% jump in crop‑protection earnings signals not only pricing power but also successful R&D and market penetration in a segment that has traditionally been a high‑margin add‑on for fertilizer makers.
Coromandel International's Backward Integration Shields Fertilizer Margins
Backward integration means the company owns critical upstream inputs—most notably sulphur, a key raw material for nitrogen‑based fertilizers. When sulphur prices spike, pure‑play fertilizer producers see margins compress. Coromandel, however, sources a large portion of its sulphur internally, insulating its cost base.
Motilal Oswal forecasts that sulphur prices will normalize over the next 12‑18 months. For Coromandel, this translates to a margin cushion that many peers lack. In practice, the company can maintain a gross margin of roughly 28‑30% while peers like Tata Chemicals may see margins dip below 25% during the same period.
Coromandel International's Sulphur Price Normalization: What It Means for Investors
Sulphur is a commodity with a historically cyclical price pattern, tied to global oil refining output and geopolitical supply shocks. The recent rally was driven by tighter refinery margins and logistical bottlenecks. As refineries stabilize and new capacity comes online, supply‑side pressure is expected to ease.
For Coromandel, a stable sulphur market means predictable cost structures, which in turn supports earnings visibility—a premium factor for valuation. The company’s internal sulphur plant, with a capacity of 1.2 million tonnes per annum, gives it a strategic edge that is difficult for competitors to replicate quickly.
Coromandel International's Competitive Landscape: Tata, Adani, and the Margin Race
In the Indian fertilizer arena, Tata Chemicals and Adani Enterprises are the two biggest rivals. Tata has been expanding its phosphatic portfolio, while Adani’s aggressive acquisitions have increased its exposure to global raw‑material price volatility.
Both peers rely heavily on external sulphur procurement, leaving them vulnerable to price spikes. Coromandel’s integrated model therefore offers a relative‑value upside. Moreover, while Tata’s earnings grew at 4% YoY and Adani’s at 6% in the same quarter, Coromandel’s 47% crop‑protection earnings surge creates a differentiated growth vector that the market has yet to fully price in.
Coromandel International's Historical Parallel: The 2014‑15 Fertilizer Cycle
Look back to the 2014‑15 fiscal year when Indian fertilizer margins collapsed due to a sharp sulphur price surge. Companies without backward integration saw profit warnings, whereas Coromandel’s internal sulphur plant allowed it to maintain a 2‑point margin advantage. The stock rallied 22% over the following 12 months, rewarding patient investors.
The current environment mirrors that past scenario, albeit with the added catalyst of a booming crop‑protection market. History suggests that firms with integrated supply chains tend to outperform during commodity‑price corrections.
Coromandel International's Valuation Snapshot: 25× FY28E EPS
Motilal Oswal values Coromandel at roughly 25 times its projected FY28 earnings per share, implying a target price of INR 2,800. This multiple may appear premium relative to the sector average of 20×, but it is justified by three factors:
- Growth premium: double‑digit EBITDA growth through FY28.
- Margin protection: backward integration reduces cost volatility.
- Strategic diversification: high‑margin crop‑protection segment.
Comparatively, Tata Chemicals trades at 19× FY28E EPS and Adani at 17×, underscoring the relative discount for peers lacking Coromandel’s integrated advantage.
Investor Playbook: Bull vs. Bear Cases for Coromandel International
Bull Case
- Continued EBITDA acceleration above 10% YoY through FY28.
- Sulphur price stability amplifies margin resilience.
- Crop‑protection segment captures >15% market share, driving higher EBIT margins.
- Valuation expands to 28‑30× FY28E EPS as the market re‑rates integrated players.
Bear Case
- Unexpected regulatory changes on fertilizer subsidies compress demand.
- Supply‑chain disruptions at the sulphur plant raise internal costs.
- Crop‑protection growth slows due to intensified competition from multinational agro‑chemical firms.
- Valuation contracts to sub‑20× FY28E EPS amid a broader market sell‑off.
Given the current risk‑reward balance, the bullish narrative outweighs the bearish, making Coromandel International a compelling addition for growth‑oriented portfolios seeking a blend of operational resilience and upside valuation.