Thursday, 13 November 2008

Hold Gujarat State Fert, target of Rs 107: Emkay

Emkay Global Financial Services has maintained its buy rating on Gujarat State Fertilizers Company (GSFC) with a target of Rs 107 in its November 12, 2008 research report. "Company’s revenues increased by 59% YoY to Rs 17.4 billion. Profit growth was boosted by 2.7x increase in profit from fertiliser on account of 534bps YoY improvement in margins to 13.6% while chemical segment reported lowest ever margins in last 4-5 years at 13.6%, -830bps YoY. Given the weak outlook on company’s chemicals portfolio (primarily includes caprolactum) and delays in few ongoing projects we are downgrading our FY10E net revenues by 7.2% from Rs 46 billion to Rs 42.8 billion, APAT (excluding provision for contribution to Gujarat state development fund) by 37.6% from Rs 4.5 billion to Rs 2.8 billion and AEPS estimates by 37.6% from Rs 56.4 to Rs 35.2."

"We have provided 30% of company’s PBT for FY09E and FY10E for Gujarat state contribution since there has been no clarity on this issue till now. We are also downgrading our price target from Rs 227 to Rs 107, which is 50% discount to its FY09E book value of Rs 214 and maintain our HOLD recommendation," says Emkay Global Financial Services' research report.

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Source: Moneycontrol

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