Coromandel Invests ₹2,000 Crore in Andhra Pradesh; Targets Green Ammonia & Fertilizer Expansion

Coromandel International’s ₹2,000 crore Andhra Pradesh bet signals aggressive expansion, but traders face a critical question: will this capex announcement break the stock’s five-month downtrend from ₹2,718 highs? At ₹2,210, the fertilizer giant trades 18.7% below its July peak despite posting 21% profit growth in Q2. The investment MoU could be the sentiment trigger bulls have waited for, yet execution risks and subsidy delays loom large.

What Happened

On November 13, Coromandel signed a non-binding MoU with the Andhra Pradesh Economic Development Board to invest up to ₹2,000 crore in green ammonia, green hydrogen, and fertilizer capacity expansion. This separate from its existing ₹1,000 crore Kakinada phosphoric acid complex. The agreement, disclosed under SEBI Regulation 30, positions Coromandel to build India’s second-largest phosphatic fertilizer facility. CEO S Sankarasubramanian highlighted the move strengthens backward integration and reduces import dependency. The Kakinada brownfield expansion remains on track for Q4 FY26 commissioning.

According to the Times of India (November 13, 2025), the agreement was signed in the presence of Chief Minister Chandrababu Naidu, underscoring the project’s strategic importance. The investment covers multiple phases, with the first focusing on enhancing acid production capabilities at existing sites.

Stock Performance & Analyst View

Coromandel closed at ₹2,210.20 on November 13, up 1.16% with improving daily momentum. The stock has climbed 3% over five sessions, rebounding from October lows near ₹2,124. Analyst consensus remains bullish: Investing.com’s 11-analyst survey shows 10 Buy, 1 Hold ratings with average target ₹2,603.45 (17.8% upside). Mirae Asset Sharekhan (September 25, 2025) maintains Buy with ₹2,535 target (14.7% upside).

The bullish skew reflects strong Q2 FY26 results where net profit jumped 21% YoY to ₹805 crore and revenue surged 30% to ₹9,771 crore. However, the stock sits 38% above its ₹1,596 March low, suggesting considerable rally already priced in. Volume has averaged 256,506 shares recently, well below the 1.5 million daily volume seen during July’s peak, indicating institutional participation remains cautious.

What This Means for Traders

This MoU transforms Coromandel’s narrative from cyclical fertilizer play to clean energy transition story. For conservative traders, watch the ₹2,250-2,300 zone – a break above the 50-day moving average with volume expansion above 400,000 shares would confirm trend reversal. The ₹2,718 52-week high remains a multiyear ceiling; reaching it requires flawless capex execution.

Aggressive traders can accumulate on dips toward ₹2,180-2,190 with stops at ₹2,100, which marks the October support confluence. The ₹1,596 March low represents your hard stop for any swing trade thesis. Risk-reward at current levels offers roughly 3:1 upside to analyst targets versus 5% downside to support.

Key risks could derail momentum: subsidy outstanding stood at ₹3,199 crore on September 30, though ₹1,000 crore was received in October per Morningstar’s Q2 earnings call. Any delay beyond Q3 in subsidy disbursements would pressure working capital. Margin contraction in crop protection (124 bps in Q2) signals pricing pressure, while the NACL acquisition integration remains in early stages. Energy costs for the Visakhapatnam desalination project running at 4.8 kWh/M³ also raise operational expense concerns.

Next catalysts: Q3 FY26 results in January will test if volume growth sustains 30%+ rates. More critical is Q4 FY26 commissioning of the Kakinada acid complex – any slippage would hit FY27 earnings estimates. The Technical sentiment signal on announcement day was “Buy” with 13,313 average volume, suggesting algo-driven interest.

The Bigger Picture

India’s fertilizer market will grow from $45.89 billion (2025) to $62.83 billion by 2030 at 6.3% CAGR, per Growth Trends (October 24, 2025). Government’s Nutrient-Based Subsidy framework and PM-Kisan benefits directly support demand. Coromandel’s 18% NPK market share and rock phosphate mining in Senegal provide competitive moats. The shift toward nano-fertilizers and green ammonia aligns with policy tailwinds, though peer competition from UPL and Chambal Fertilisers intensifies.

The company’s debt-to-equity ratio of 0.07 provides firepower for capex, while 56.88% promoter holding signals insider confidence. However, the P/E ratio of 29.12 suggests valuation is not cheap, requiring earnings delivery to justify premiums.

Closing

Coromandel’s ₹2,000 crore Andhra Pradesh commitment validates its backward integration strategy and positions it for the green transition. While analyst targets suggest 15-18% upside, traders should focus on price action – only a sustained move above ₹2,300 confirms the bottom is in. For now, risk-reward favors accumulation with tight stops, but be ready to exit if Q3 margins disappoint or subsidy flows stall again. The key is execution: if Kakinada commissioning hits Q4 targets, ₹2,700 retest becomes likely by Q1 FY27.

Disclaimer: This blog has been written exclusively for educational purposes and does not constitute investment advice or personal recommendations. The author is not SEBI-registered as an investment advisor. Recipients should conduct their own research and consult a qualified, SEBI-registered investment advisor before making any investment decisions. Investments in the securities market are subject to market risks; read all related documents carefully before investing.