HSBC downgrades Coromandel International to 'Neutral'

Coromandel International to hit Rs 330 HSBC has downgraded Coromandel International to ‘Neutral’ from ‘Overweight’ and reduced its target price to Rs 300 from Rs 335. “Our valuation is reduced by 16% on account of the earnings estimate cut but is compensated by slight improvement of working capital resulting from lesser inventory dumping,” said HSBC in a report. Key risks are rupee appreciation or depreciation, sowing during Rabi season, increase or decrease in price of phosphoric acid. Fertilizer sales volume was down 25% y-o-y on high inventory, poor monsoons, and high prices. The company acknowledged that it had to extend its credit period to 60 days from what used to be cash and carry market and gave discounts as well.