This is part 1 of the Fundamental Analysis of Chambal Fertilisers & Chemicals Ltd (CFCL). An explainer video is below that explains the business model, sector analysis, and 3 moats of the stock:
WATCH THIS VIDEO explaining the fundamentals of the stock in depth!!
Let us Start with the Chambal Fertilisers History
Management of Chambal Fertilisers
Core Market Area of Chambal Fertilisers
Revenue Mix of Chambal Fertilisers
Chambal Fertilisers & Chemical generates most of its revenue from Urea. Hence, the company follows the typical business model of a Urea manufacturer.
Let us focus on the other products made by this company:
The above-mentioned products are covered under the Nutrient Based Subsidy (“NBS”) policy of the Government of India.
The pricing of these products is de-controlled and the Government of India pays a fixed amount of subsidy based on the different nutrients in these fertilizers.
To paraphrase Warren Buffett – if you are investing in a commodity product company then one should always invest with the least-cost manufacturer.
Fertilizer is a commodity. Hence, a manufacturer with the least cost of manufacturing only can win in the long term. So we have analyzed the efficiency and capacity utilization of the 3 plants owned by the company and here what we have found:
3 Unique Moats of CFCL
With this, the first leg on CFCL gets covered.
In the next blog we will cover the following:
- Financial Analysis: Numbers seldom lie!
- 4 Tailwinds helping the stock fly!
- Valuation: How much to pay for this stock?
Also, watch the coverage on Coromandel International Ltd below: