Coromandel International vs FACT – finances, future plans and more

Coromandel International vs FACT: Fertilizers are the unsung heroes that ensure bountiful harvests and play a critical role in ensuring global food security. These nutrient-rich chemicals allow plants to grow vigorously and produce nutritious crops. Two companies engaged in this field are Coromandel International and FACT Limited.

In this article, we will compare Coromandel International and FACT in detail and find out which of the two companies has better prospects for the future.

Industry Overview

In recent years, the global fertilizer industry has undergone a transformation by promoting best practices in production and use to achieve high agricultural yields while reducing greenhouse gas emissions and increasing energy efficiency.

Over the past few years, the Indian government has implemented economic reforms and provided fertilizers at affordable prices to increase agricultural productivity.

The size of India’s fertilizer industry reached ₹942.1 billion in FY23. According to IMARC Group, the market is expected to reach Rs 1,383.8 billion by 2032, at a growth rate (CAGR) of 4.2% during 2024-2032.

Growth will be fueled by factors such as rapid urbanization, population growth, increasing food consumption, increasing demand for fertilizers, new technological advancements, and implementation of favorable government initiatives.

Company Overview

We learned a little about the industry in which the company operates in the previous part. Now let’s look at a little background on both companies.

Coromandel International

Coromandel International, part of the Murugappa Group, is one of India’s leading agricultural solutions providers. As a leading agricultural solutions company, the company offers a wide range of products and services across the crop life cycle, from seed to harvest.

The company primarily operates through two main segments: Nutrients and Other Related Businesses and Crop Protection. The product portfolio consists of various types of fertilizers, crop protection chemicals, specialty nutrients and biopesticides.

The company has also set up 750 rural retail centers across three southern Indian states. The center serves as a direct point of contact for more than 3 million farmers.

The company currently owns 18 manufacturing facilities across India. It also has annual fertilizer manufacturing capacity of 4.5 million tons and crop protection agent manufacturing capacity of approximately 80,000 TPA.

The company distributes its extensive product line in over 80 countries around the world. In India, we distribute our products through a network of approximately 20,000 dealers and 2,000 marketing and agronomy experts, providing farm advice and services to over 200 million farmers every year.

Fact Co., Ltd.

Established in 1943, Fertilizers And Chemicals Travancore Limited (FACT) is India’s leading fertilizer and chemicals manufacturing public sector company.

Since its inception, the organization has expanded and diversified into various sectors and functions, focusing on manufacturing and marketing of fertilizers and petrochemical products, engineering consulting, and design, fabrication and installation of industrial equipment.

The company has a manufacturing capacity of 2.25 lakhs MTPA dedicated to ammonium sulphate production, 6.33 lakhs MTPA dedicated to Factamfos and 0.50 lakhs MTPA dedicated to caprolactam production.

In addition, we have expanded our fertilizer marketing business across the country, including Maharashtra, West Bengal, Odisha, Gujarat, and Bihar, and have 5,566 fertilizer distribution agencies.

Coromandel International vs FACT – Finance

Now let’s compare the financial status of the two companies.

revenue growth

Looking at the revenue of both companies, we see that Coromandel International’s revenue has increased from ₹13,204 Crores in FY19 to ₹29,628 Crores in FY23. This will enable the company to grow its revenue at a CAGR of 22.29% from FY19 to FY23.

On the other hand, FACT Ltd’s revenue is relatively less than Coromandel International. Revenue 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 higher than that of Coromandel International.

The table below shows the total revenue growth of Coromandel International and FACT over the last five years (in Rs. Crores).

increase in net profit

The net profits of the two companies also showed a similar trend. From FY19 to FY23, Coromandel International’s revenue increased from ₹714 Crores to ₹2,013 Crores respectively.

Similarly, FACT Ltd’s revenue increased from ₹162.68 Crores in FY19 to ₹612.98 Crores in FY23.

Coromandel Internationals reported higher net income, but Fact Ltd’s four-year CAGR is better.

The four-year average annual profit growth rate of Coromandel Internationals and Fact Ltd was 29.58% and 39.32%, respectively.

The figures below highlight the net profit growth of Coromandel International and FACT over the last five financial years (in Rs. Crores).

profit

If we compare the profit margins of the companies, we can see that FACT Ltd performed better in terms of margins. However, volatility in input prices, heavy dependence on imports and lack of infrastructure facilities for handling and storage have taken a huge toll on margins for both companies.

During FY23, Coromandel International and FACT Ltd reported operating profit margins of 9.87% and 14%, respectively.

The figures below compare the operating profit margins of Coromandel International and FACT over the last five financial years.

The net profit margins of the two companies are showing a similar trend to their operating profit margins. During FY23, Coromandel International and FACT Ltd reported operating margins of 6.79% and 10%, respectively.

The figures below compare the net profit margins of Coromandel International and FACT over the last five financial years.

rate of return

Looking at returns, we can see that Coromandel International has reported exceptional ROE over the last five years, representing a high return on the capital invested by shareholders.

On the other hand, FACT Ltd has no ROE because the company’s net worth was negative.

The figures below highlight Coromandel International’s RoE over the last five financial years.

Likewise, Coromandel Internationals has also reported excellent ROCE over the past five years. This means that the company is utilizing its resources efficiently.

On the other hand, ROCE data provided by FACT Ltd indicates the average resource utilization of the company.

The figure below compares RoCE of Coromandel International and FACT over the last five financial years.

debt ratio

Looking at the debt-to-equity ratios of both companies, we can see that Coromandel International has completely eliminated its balance sheet over the years.

On the other hand, FACT Ltd recorded a negative debt-to-equity ratio until 2021 due to negative net assets. During FY23, the debt-to-equity ratio was reported to be 3.27. This indicates that the company’s leverage is very high.

The figures below highlight the debt-to-equity ratios of Coromandel International and FACT over the past five years.

Future Plans

So far, we have studied the financial statements of companies and understood the performance of each company. Now, let’s take a look at the future of both companies and see what they have in store.

Coromandel International

1. The company plans to invest Rs 1 billion in crop protection chemicals and CDMO over the next two years.
2. The company acquired 45% stake in BMCC to meet its raw material needs. This will help strengthen backward integration to ensure long-term security of supply of key raw materials.
3. The company has invested in the SAP 3 project, which will be commissioned in FY2024.
4. The company has made strategic investments in Agtech startups.
5. The company has invested in a multipurpose plant in Ankleshwar and a desalination plant in Visakhapatnam.

Fact Co., Ltd.

1. The company has planned to increase its fertilizer trading activities.
2. The company plans to operate PAN India and also plans to tie up with other fertilizer PSUs to strengthen sales.
3. The company expects to generate healthy profits in FY24 due to increased production and sales of chemical and petrochemical products.
4. The company plans to tie up with corporates for the supply of RLNG and other fertilizer inputs to ensure continuous supply of raw materials.
5. FACT is in the process of commissioning/implementing various CAPEX projects that can increase the company’s fertilizer production from 10 lahks MT to 14 lakh MT.

Coromandel International vs FACT – Key Indicators

Our FACT comparison with Coromandel International is almost complete. Let’s take a look at some important metrics for stocks that haven’t been included before.

conclusion

A comparative study between Coromandel International and FACT has been completed. From this article, we can conclude that the company’s sales and profits have grown at a better rate than Coromandel International.

However, we should also note that Coromandel International has a good ROCE and no debt. On the other hand, FACT Ltd has a decent ROCE and is comprised of a large amount of debt.

Which of the two stocks do you think is better? What can investors expect from both companies in the future? Please share your thoughts in the comments section below.

Written by Aaron Barth

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