Given the bullish outlook for demand for ammonium nitrate, the company is committed to a further 15% expansion of the Moranbah output by FY22.
Citi has visited the plant and the BMA coal mine nearby and assesses, along with the new technology alliance with BHP Group ((BHP)), Moranbah appears poised for a strong earnings recovery in the next 3-5 years.
While sensing some concerns regarding the company’s ability to realise significant value for the fertiliser segment, Citi does not rule out a strategic buyer. Buy rating maintained. Target is raised to $3.55 from $3.45.
Target price is $3.55.Current Price is $3.18. Difference: $0.37 – (brackets indicate current price is over target). If IPL meets the Citi target it will return approximately 10% (excluding dividends, fees and charges – negative figures indicate an expected loss).