Coromandel International Vs FACT: Fertilizers are the unsung heroes behind our harvest’s bounty, playing a critical role in securing global food security. These nutrient-rich chemical compositions enable plants to develop vigorously and produce nutritious crops. Two such companies that work in this sector are Coromandel International and FACT Limited.
In this article, we shall conduct a detailed comparison of Coromandel International Vs FACT and find out which of the two companies has a better outlook for the future.
Table of Contents
Industry Overview
In recent years, the fertilizer industry worldwide has undergone a shift by promoting best practices in production and usage in order to achieve high agricultural yield while reducing greenhouse gas emissions and enhancing energy efficiency.
During the past several years, the Government of India has brought economic reforms and ensured that fertilizers are available at affordable prices to increase agriculture productivity.
In FY23, the size of the Indian fertilizer industry reached ₹942.1 Billion. According to the IMARC Group, the market is expected to reach ₹1,383.8 Billion by 2032 at a growth rate (CAGR) of 4.2% during 2024-2032.
The growth will be driven by factors like rapid urbanization, growing population, and increasing food consumption escalating demand for fertilizers, emerging technological advancement, and the implementation of favorable government initiatives
Company Overview
We learned a little bit about the industry in which the firms operate in the preceding part. Let us now get a bit of background of both companies.
Coromandel International
Coromandel International, part of Murugappa group is one of the leading Agri solutions providers in India. As the leading agri-solutions player, the company offer a wide range of products and services across the crop life cycle from seed to harvest stages.
The company primarily operates in two major segments: Nutrients & other allied businesses and Crop Protection. Its product portfolio comprises various types of fertilizers, crop protection chemicals, speciality nutrients, and biopesticides.
Additionally, the company has established 750 rural retail centres in three southern Indian states. These centres serve as a direct point of contact for more than 3 million farmers.
The company currently owns 18 manufacturing facilities across India. Furthermore, it has a manufacturing capacity of 4.5 million tonnes per annum of fertilisers and a manufacturing capacity of approximately 80,000 TPA of crop protection compounds.
The company distributes its extensive product lines to more than 80 countries worldwide. In India, it distributes its products through a network of about 20,000+ dealers, and 2,000+ marketing and agronomy professionals to provide farm advisory and services to over 2 crore farmers annually.
FACT Ltd
Incorporated in 1943, Fertilisers And Chemicals Travancore Limited (FACT) is a leading fertiliser and chemical manufacturing public sector company in India.
Since its establishment, the organization has expanded and diversified into various divisions and functions, with a primary focus on manufacturing and marketing of fertilizers and petrochemicals, engineering consultancy, as well as design, fabrication and erection of industrial equipment.
The company has a manufacturing capacity of 2.25 lakhs MTPA dedicated to the production of Ammonium Sulphate, 6.33 lakhs MTPA dedicated to Factamfos, and 0.50 lakhs MTPA dedicated to Caprolactam production.
Furthermore, it has expanded its fertiliser marketing operations to cover the entire country, including the states of Maharashtra, West Bengal, Odisha, Gujarat, and Bihar, and has 5,566 dealers for fertiliser distribution.
Coromandel International Vs FACT– Financials
Now let us compare the financials of both the companies.
Revenue Growth
If we take a look at the revenues of both companies, we can see that the revenues of Coromandel International have increased from ₹13,204 Crores in FY19 to ₹29,628 Crores in FY23. This gives the company a revenue CAGR of 22.29% from FY19 to FY23.
On the other hand, the revenues of FACT Ltd are comparatively lesser than Coromandel International. The revenue has increased from ₹1954.59 Crores in FY19 to ₹6198.14 in FY23. This gives the company a 4-year revenue CAGR of 33.44% which is better than that of Coromandel International.
The table below showcases the total revenue growth of Coromandel International Vs FACT for the last five financial years (figures in Rs. Crores).
| Fiscal Year | Coromandel International | FACT |
|---|---|---|
| 2019 | 13,204 | 1954.59 |
| 2020 | 13,137 | 2769.91 |
| 2021 | 14,182 | 3258.82 |
| 2022 | 19,111 | 4424.8 |
| 2023 | 29,628 | 6198.14 |
| 4-year CAGR | 22.39% | 33.44% |
Net Profit Growth
The net profits of both the companies have followed a similar trend. From FY19 to FY23, the profits of Coromandel International increased from ₹714 Crores to ₹2,013 Crores, respectively.
Similarly, the profits of FACT Ltd increased from ₹162.68 crores in FY19 to ₹612.98 Crores in FY23.
While Coromandel Internationals has reported net profits in greater numbers, the 4-year profit CAGR of Fact Ltd is better.
The 4-year profit CAGR of Coromandel Internationals and Fact Ltd stood at 29.58% and 39.32%, respectively.
The figures below highlight the net profit growth of Coromandel International Vs FACT for the last five fiscal years (figures in Rs. Crores).
| Fiscal Year | Coromandel International | FACT |
|---|---|---|
| 2019 | 714 | 162.68 |
| 2020 | 1,065 | 975.5 |
| 2021 | 1,329 | 351.98 |
| 2022 | 1,528 | 346.37 |
| 2023 | 2,013 | 612.98 |
| CAGR growth | 29.58% | 39.32% |
Profit Margins
When we compare the profit margins of the company, we can see that FACT Ltd has performed better on the margins front. However, the margins of both companies have taken a toll due Volatility of input price, over-dependence on imports and lack of infrastructure facilities for handling and storage
During FY23, Coromandel International and FACT Ltd reported an operating profit margin of 9.87% and 14%, respectively.
The figures below compare the operating profit margins of Coromandel International Vs FACT over the last five fiscal.
| Fiscal Year | Coromandal International | FACT |
|---|---|---|
| 2019 | 10.91% | 23% |
| 2020 | 13.17% | 11% |
| 2021 | 13.99% | 19% |
| 2022 | 11.24% | 16% |
| 2023 | 9.87% | 14% |
The net profit margins of both companies have followed a similar trend as the operating profit margins. During FY23, Coromandel International and FACT Ltd reported an operating profit margin of 6.79% and 10%, respectively.
The figures below compare the Net profit margins of Coromandel International Vs FACT over the last five fiscals.
| Fiscal Year | Coromandel International | FACT |
|---|---|---|
| 2019 | 5.45 % | 8% |
| 2020 | 8.11 % | 35% |
| 2021 | 9.37 % | 11% |
| 2022 | 8 % | 8% |
| 2023 | 6.79 % | 10% |
Return Ratios
Coming to the return ratios, we can that Coromandel International has reported an exceptional ROE over the past 5 years indicating a high return on the capital invested by shareholders.
On the other hand, FACT Ltd does not have an ROE as the net worth of the company has been negative.
The figures below highlight the RoE of Coromandel International for the last five fiscal years.
| Fiscal Year | Coromandel International |
|---|---|
| 2019 | 23.13% |
| 2020 | 27.85% |
| 2021 | 28.15% |
| 2022 | 26.62% |
| 2023 | 28.27% |
Similarly, coromandel Internationals has also reported exceptional ROCE over the last five years. This means the company has been utilizing its resources efficiently.
On the other hand, the ROCE data provided by FACT Ltd indicates an average utilization of the resources by the company.
The figures below highlight the RoCE of Coromandel International Vs FACT for the last five fiscal years.
| Fiscal Year | Coromandel International | FACT |
|---|---|---|
| 2019 | 21.00% | N/A |
| 2020 | 26.00% | N/A |
| 2021 | 33.00% | 23% |
| 2022 | 35.00% | 16% |
| 2023 | 37.00% | 19% |
Debt-to-equity Ratio
Through the debt-to-equity ratio of both companies, we can see that Coromandel International has completely removed its balance sheet over the past years.
On the other hand, FACT Ltd had a negative debt-to-equity ratio until 2021 due to its negative net worth. During FY23, it has reported a debt-to-equity ratio of 3.27. This indicates that the company is highly leveraged.
The figures below highlight the debt-to-equity of Coromandel International Vs FACT for the last five fiscal years.
| Fiscal Year | Coromandel International | FACT |
|---|---|---|
| 2019 | 0.98 | Negative |
| 2020 | 0.86 | Negative |
| 2021 | 0.37 | Negative |
| 2022 | Nil | 6.16 |
| 2023 | Nil | 3.27 |
Future Plans
So far, we studied the financial statements of the company and understood how each company is performing. Let us now look at both companies’ futures to see what the company has on hold;
Coromandel International
- The company plans to invest Rs 1,000 crore in crop protection chemicals and CDMO in the next two years.
- The company has acquired a 45% stake in BMCC is meet its raw material needs. This will help it strengthen its backward integration to ensure long-term supply security of the key raw materials.
- The company has invested in the SAP 3 Project which is to be commissioned in FY2024.
- The company has made some strategic investments in Agtech startups
- The company has invested in a Multi-Purpose Plant at Ankleshwar and a Desalination Plant at Visakhapatnam
FACT Ltd
- The company has made plans to increase its fertilizer trading activities.
- The company has plans to make its operations PAN India and also plans to tie up with other fertiliser PSUs in order to enhance sales.
- The company expects the production and sale of Chemicals and petrochemical products to increase in FY24 which can generate good revenue.
- The company plans to tie up with firms for the supply of RLNG and other fertiliser inputs to ensure a continuous supply of raw materials.
- FACT is in the process of commissioning/implementing various CAPEX projects which would result in an increase in fertiliser production of the Company from 10 lahks MT to 14 lakh MT.
Coromandel International Vs FACT – Key Metrics
We’re nearly done with our Coromandel International Vs FACT comparison. Let’s have a look at some critical metrics for the stock that weren’t included previously.
| Particulars | Coromandel International | FACT |
|---|---|---|
| CMP | ₹ 1,238.95 | ₹ 778 |
| Market Cap (Cr.) | ₹ 36,510 | ₹ 50,633 |
| EPS | 68.76 | 7.86 |
| Stock P/E | 15.94 | 91.81 |
| RoE | 28.27% | NA |
| RoCE | 37.00% | 0.19% |
| Price to Book Value | 3.56 | 33.07 |
| Promoter Holding | 57.33% | 90.00% |
Conclusion
We have come to an end of the comparative study of Coromandel International Vs FACT. Through this article, we can conclude that the revenues and profits of the company have grown at a better rate than Coromandel International.
But, one has to also note that Coromandel International has a good ROCE and is also debt-free. On the other hand, FACT Ltd has a moderate ROCE and comprises huge debt.
Which of the two stocks do you think is superior? What can investors anticipate from both firms in the future? Share your thoughts in the comments section below.
Written By Aaron Vas
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