Accumulate Paradeep Phosphates, Target Price Rs 133: Prabhudas Lilladher

Prabhudas Lilladher Forecasts Strong Growth for Paradeep Phosphates Amid Industry Challenges

A recent visit to Paradeep Phosphates' fertilizer plant at Paradeep, Odisha, provided valuable insights into the company's integrated operations, raw material sourcing strategy, capacity expansion plans, and long-term growth roadmap. The management team highlighted their focus on increasing the company's phosphatic fertilizer market share to 20%+, adding 1 million metric tons per annum (mmtpa) granulation capacity at Paradeep, and strengthening backward integration through phosphoric acid and corresponding sulfuric acid expansions.

In response to the sharp increase in raw material costs, Paradeep Phosphates has implemented a price hike of INR400-500 per bag. Industry participants continue to engage with the government for a revision in Nutrient Based Subsidy (NBS) rates to reflect prevailing input cost inflation. The sustainability of alternate sourcing arrangements for key raw materials amid ongoing geopolitical tensions and supply chain disruptions will be an important factor to watch.

Key Financial Projections

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Based on the impact of the sharp increase in raw material costs and the price hike implemented by the company, Prabhudas Lilladher forecasts revenue, EBITDA, and PAT CAGR of ~15%, ~9%, and ~8% respectively over FY26-28E. At the current market price (CMP), Paradeep Phosphates trades at ~10x FY28E earnings per share (EPS). The research firm maintains its 'Accumulate' rating on the stock and values the company at 11x FY28E EPS, arriving at a target price (TP) of INR133 per share.