Coromandel International Q1 FY27: Higher revenue, softer margins, and a stronger non-subsidy engine

Coromandel International started FY27 with a quarter that showed both resilience and clear pressure points. Consolidated revenue from operations rose to INR 8,165 crores in Q1 FY27, up 16% year on year. But EBITDA slipped 3% to INR 761 crores, and profit after tax declined 24% to INR 382 crores.

The headline split explains the story. The company benefited from higher fertilizer realizations and steady growth in its non-subsidy businesses, but the phosphatic value chain faced a cost shock. Management repeatedly pointed to elevated prices of key inputs such as sulphur, ammonia and phosphoric acid, and to the fact that the revised NBS subsidy rates did not fully compensate for the post-crisis increase in global raw material costs.

The quarter in numbers

The consolidated P and L in the investor presentation shows a clear mix shift between growth and profitability. Revenue rose, but margins compressed. EBITDA margin declined to 9% from 11% a year ago, and PAT margin fell to 5% from 7%.

The company also reported book value per share of INR 439, up 11% year on year, while basic EPS for the quarter was INR 12.9.

Nutrients: revenue up, profitability down

In the nutrients segment, sales rose 9% to INR 6,951 crores in Q1 FY27. But PBIT declined 24% to INR 479 crores. This divergence was consistent with management commentary that margins were under pressure because the sudden spurt in ammonia and sulphur was not factored into the subsidy rates.

Operationally, the company also chose to moderate production. Management said fertilizer production was reduced to 6.9 lakh tons compared to 8.4 lakh tons, or about 72% of capacity utilization, with the intent of optimizing inventory amid raw material volatility.

Volumes reflected that caution. Primary sales of NPK and DAP were down, driven by a sharp fall in imported volumes. Meanwhile, SSP volumes grew strongly.

Even with moderated volumes, management highlighted market share gains. Primary market share was stated at 22% versus 18% last year, and point-of-sale rose 13% to 7.9 lakh tons, which management said improved consumption market share to 16%.

A notable theme in SSP was premiumization. Management said differentiated products like GroPlus and Urea-SSP formed more than 50% of SSP sales, underlining a push to improve mix and realization.

The broader industry context also mattered. In Q1 FY27, industry production and imports of DAP and NPK were down materially, while urea imports rose sharply. Management explicitly linked weak NPK production to the subsidy economics, stating that without revision, it does not make economic sense for domestic capacities to produce at high sulphur and ammonia prices.

Crop protection: record quarter, exports and mix doing the heavy lifting

Crop Protection Chemicals was the standout in Q1. On a standalone basis, CPC revenue grew 20% to INR 870 crores, while PBIT rose 44% to INR 159 crores. On a consolidated basis including NACL, CPC revenue was INR 1,251 crores and PBIT was INR 170 crores.

Management attributed the performance to strong exports and B2B sales, a better product mix, traction in key molecules, and an ability to pass on higher raw material costs in export markets.

The consolidation of NACL Industries also changed the shape of the business. Management said NACL EBITDA rose 9% to INR 41 crores with margin improving to 11% from 8%. Revenues at NACL were moderate at INR 383 crores due to lower export volumes and price pressure, but management positioned this as consistent with what was envisaged at acquisition.

From a capability standpoint, the crop protection business is still investing, but management signaled a preference to sweat assets. Capacity expansion of key molecules is expected to be commissioned by September. Management also spoke about building fluoro chemistry capabilities and setting up a launch facility at Ankleshwar to support product development and scale-up before making larger CDMO investments.

Non-subsidy growth engines: retail, bio, nano, and services

Beyond CPC, management highlighted traction across several newer or scaled platforms.

Retail delivered what management called an outstanding performance, with revenue up 85% year on year. The store network expanded by 22 outlets to over 1,200. Profitability also improved, with 76% of stores profitable versus 61% last year.

Bioproducts delivered a steady quarter, supported by domestic and export markets. Management also described a value chain shift where white label products previously sourced externally would now be manufactured by the bio business and sold through captive retail outlets.

Nano products were described as stable, with sales volume up 2% year on year and a market share of nearly 60% in Nano DAP. However, management also pointed to state-level bans in UP and Maharashtra that moderated growth. Exports of nano products were initiated during the quarter.

Drone spraying services continued to gain traction, and management said it is evaluating higher capacity drones capable of fertilizer applications. The drone subsidiary Dhaksha has focused on agri-drone platforms, with Coromandel itself purchasing about 100 to 150 drones in the quarter and planning to expand the fleet to 500 drones during the year.

Backward integration and supply security: plants and Senegal mining

A key strategic narrative in the call was raw material security in a volatile phosphatic environment.

Management said the sulphuric acid and phosphoric acid plants have been commissioned and stabilized. Sulphuric acid achieved rated capacity and generated power as envisaged. Phosphoric acid operations are stabilizing, and a new technology is being implemented to optimize rock utilization. The granulation project is progressing and management said it is on track for commissioning in Q4.

The Senegal rock phosphate mining project produced over 1.1 lakh tons in the quarter, in line with plan. Management described it as strategic, not only for the margin captured at the mining entity, but also for the value gap once rock is converted into acid. The company is also evaluating an SSP facility in Senegal to create value addition using reject rocks, with management indicating a cost of about USD 5 to 6 million for 100,000 to 150,000 tons.

Policy and subsidy: the key swing factor

If there was one repeated variable across the call, it was subsidy revision for NP and NPK.

Management said the industry has already taken price increases, roughly 25% to 30% across grades, and beyond that a subsidy correction is needed. They also pointed to the policy framework that envisages subsidy based on a six-month average, arguing that the rates announced did not reflect subsequent cost escalation.

From a cash flow perspective, management noted that the government has been prompt in clearing subsidy dues. The CFO said subsidy outstanding as on 30 June was about INR 3,254 crores, and an additional INR 568 crores was received in July.

Management also discussed a pilot of a QR code enabled fertilizer sales framework that links farmer, land and crop data to recommended purchases. Management believes this could restrict excess usage of urea and DAP and improve nutrient stewardship if scaled.

Capital allocation: a pause after heavy investment

Management emphasized a focus on returns from recent investments. The CEO said that over the last 3 to 4 years, the company invested close to INR 7,000 crores across organic and inorganic opportunities, and it is important to generate cash and returns before committing to further large capex.

For the near term, management indicated a normal sustainable capex of about INR 300 crores, while remaining open to projects that clear return thresholds. In fertilizers, management suggested that immediate capacity additions are unlikely, and that the company wants to sweat the newly commissioned assets.

Takeaways

Q1 FY27 showed why Coromandel has been building a broader agricultural solutions portfolio. While fertilizer profitability was pressured by global input costs and subsidy timing, crop protection and retail helped protect performance.

The next phase depends on a few tangible swing factors: subsidy revision for kharif, normalization in sulphur and ammonia pricing, and execution on the granulation commissioning targeted for Q4. With net debt to equity reported at 0.0 times and multiple non-subsidy engines scaling, the company enters the rest of FY27 with levers beyond a single commodity cycle.