JM Financial maintains Buy call on Paradeep Phosphates, target price at Rs 145

JM Financial has maintained its Buy call on Paradeep Phosphates with a target price of Rs 145. The current market price of Paradeep Phosphates is Rs 110.55. The time period given by the analyst is a year when Paradeep Phosphates price can reach the defined target. Paradeep Phosphates, incorporated in 1981, is a Small Cap company with a market cap of Rs 9011.33 crore, operating in the Fertilisers sector.

Paradeep Phosphates' key products/revenue segments include Subsidy, Fertilisers, Scrap for the year ending 31-Mar-2024.

Financials

For the quarter ended 31-12-2024, the company has reported a Consolidated Total Income of Rs 4140.07 crore, up 7.29% from last quarter Total Income of Rs 3858.75 crore and up 59.01% from last year same quarter Total Income of Rs 2603.67 crore. The company has reported net profit after tax of Rs 158.69 crore in the latest quarter.

The company?s top management includes Mr.Saroj Kumar Poddar, Mr.N Suresh Krishnan, Mr.Karim Lotfi Senhadji, Mr.Soual Mohamed, Mrs.Rita Menon, Mr.Satyananda Mishra, Mr.Dipankar Chatterji, Mr.Subhrakant Panda. Company has B S R & Co. LLP as its auditors. As on 31-12-2024, the company has a total of 82 crore shares outstanding.

Investment Rationale
Considering JM Financial is already building in a favourable subsidy announcement, they are raising the EBITDA/MT only by ~Rs 75/MT in FY26E and ~Rs 40/MT in FY27E. As a result, their FY26E/FY27E EBITDA estimates are revised upward by 2%/1% while their EPS estimates are revised upwards by 3%/1%. The brokerage continues to believe that PPL is on a strong footing on account of ? i) steady growth in volumes, ii) improved product mix, iii) 100% phosphoric acid backward integration, iv) Goa facility energy cost savings, and v) MoU with Odisha Government providing long-term volume growth visibility. They estimate Paradeep Phosphates will register a 10%/ 22%/ 36% sales/EBITDA/EPS CAGR over FY25E-27E. They reiterate a BUY with an unchanged Mar?26 target price of Rs 145/share (based on 9x Mar?27E EBITDA, ~10% discount to Coromandel?s fertiliser business).

Promoter/FII Holdings
Promoters held 56.05 per cent stake in the company as of 31-Dec-2024, while FIIs owned 5.39 per cent, DIIs 25.54 per cent.