The cash and investments of agri-solutions provider Coromandel International Ltd. are projected to reach Rs 10,000 crore over the next three to four years, according to Prashant Biyani, vice president of institutional equity research at Elara Securities.
“Despite being in an aggressive capex mode, I think right now, investments and cash are around Rs 4,000 to Rs 5,000 crore,” he said during a conversation with NDTV Profit on Friday. “I see it increasing to around Rs 10,000 crore in the next three to four years.”
“So, I am sure the company will find some avenues to deploy some of the cash at least. But that is for sure that cash is weighing on the return profile of the company,” Biyani, who is the sector lead for agri-inputs, sugar and hotels at Elara Securities, said.
Biyani projected that the agrochemicals company would sustain a return on capital above 20% when adjusted for cash reserves. He identified several growth levers for the company over the next five years. These include aggressive capex plans, expanding its crop protection business and investments in nano fertilisers.
“They have been on an aggressive capex path in the last one year,” he said of the company’s capex plans. “So, in Q4 FY26, we will see a 2-lakh-tonne phosphoric acid plant and around 5–6-lakh-tonne sulphuric acid plant coming on stream, which will give them backwards-integration benefits and hence reduce their cost of production.”
“Going into H2 FY27, they will start a 7.5-lakh-tonne fertiliser plant,” Biyani said.
The company is investing in nano fertilisers. Though the base is currently low, it is expected to see “tremendous demand generation activity” and significant growth over the next five years, he said. “It may not contribute materially to the profits or top line, but that as a segment will also grow significantly.”
Coromandel International’s drone subsidiary, Dhaksha Unmanned Systems, is targeting drones for agriculture, defence and enterprise solution purposes.
On being asked about the company’s margins, he said the Ebitda per tonne is a better metric for the commodity-driven business. The new plants and backwards integration will contribute to profitability, particularly in the B2B segment.
While the retail business is smaller in scale, it serves as a “cash business” with minimal working capital pressure. It is currently undergoing expansion with approximately 200 new outlets planned across various states.
Watch
. Read more on Markets by NDTV Profit.