Sunidhi Securities is bullish on Gujarat Ambuja Exports and has recommended buy rating on the stock with a target of Rs 40 in its January 18, 2013 research report.
“Incorporated in 1991, GAEL is principally involved in agro-processing & trading and has focused on exports, competing in the global market. Its business segments are agro-processing, which accounted for 68% of total revenues in FY12, cotton yarn (10%), maize processing (21%) and windmills (1%). The agroprocessing division comprises solvent extraction of edible oilseed and refining, de-oiled cakes (DOC), wheat processing and cattle feed manufacturing. To focus on international trade, it has set up a wholly-owned subsidiary at Singapore.”
“During FY12, GAEL registered 8.7% increased consolidated sales of Rs2123 crore. Net profit however fell 46.5% to Rs49.9 crore mainly due to lower margins. OPM and NPM stood at 5.2% and 2.4% Vs 8.0% and 4.8% in FY11. During Q2FY13, YoY standalone loss of Rs1.8 crore transformed into a net profit of Rs29.9 crore on 31% higher sales of Rs617.8 crore. OPM and NPM stood at 8.4% and 4.8% Vs -2.0% and -0.4% in Q2FY12. During H1FY13, standalone net profit advanced 322% to Rs56.6 crore on 39% higher sales of Rs1170.5 crore. OPM and NPM stood at 8.6% and 4.8% Vs 4.4% and 1.6% in H1FY12. H1FY13 standalone EPS works out to Rs4.1 Vs Rs1.0 in H1FY12.”
“During FY12, GAEL completed the project to produce high value added derivatives called Dextrose Anhydrate for both its corn processing units. GAEL has also carried out modernization and improvements at all of its solvent extraction and refining projects. Inspired from the success of its maiden renewable energy forward integration projects of generating power from bio gas, GAEL has decided to put one more such forward integration project at both the corn processing units. The projects are expected to start functioning commercially by Q1FY14. With the retail sector development, improving standard of living & changing attitude of Indian consumers, who are becoming more health conscious and are ready to pay a premium for it, the industry players expect the demand for branded packaged sunflower oil to increase going forward. With market leadership in this category ATFL is well placed to leverage its strength and exploit the available opportunities. The core activity of GAEL has gradually been shifted from oil seed extraction to corn processing activities over a period of last few years. GAEL has acquired sufficient expertise in this segment and looking to the growth potential of this segment and would eventually replace this segment as the core segment instead of agro processing segment.”
“At the CMP of Rs27, the share is trading at a P/E of 2.9x on FY13E & 2.4x on FY14E. We recommend BUY with a target price of Rs40 at which the share will trade at a P/E of 3.5 on FY14E,” says Sunidhi Securities research report.
Shares held by Mutual Funds/UTI
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