Firstcall Research is bullish on Gujarat Alkalies and Chemicals
and has recommended buy rating on the stock with a target of Rs 156 in its January 31, 2013 research report.
“Gujarat Alkalies & Chemical Ltd (GACL), incorporated in the year 1973, is engaged in business of manufacturing basic chemicals such as sodium cyanide, sodium ferrocyanide, chloromethane, hydrochloric acid, caustic potash, potassium carbonate, phosphoric acid (85%) and hydrogen peroxide. The company started manufacturing custic soda with initial capacity of 37,425 TPA. It is the single largest producer of caustic soda in India that has a production capacity of 3,58,760 TPA and owns two manufacturing units located at Vadodara and Dahej in Gujarat. As part of its CSR initiative to ‘Go Green’ the company has planted more than 1,00,000 plants. The manufacturing facilities have been accredited with ISO 9001:2000, ISO 14001:1996 and IS 18001:2000 certification for quality management. It has already started to diversify and expand its existing infrastructure to consolidate it's supremacy in Chlor-Alkali and other integrated downstream products. The company has set up an in-house R&D centre, with well equipped and has received recognition from Department of Science and Technology and Government of India. This facility focuses on developing new and safer processes/ technologies, value added products and import substitutes.”
“Gujarat Alkalies & Chemicals Ltd is the single largest producer of Caustic Soda in India, with a production capacity of 1087 TPD, reported its financial results for the quarter ended 31st Dec, 2012. The third quarter witnesses an unhealthy increase in sales and increase the profitability due to improvement in price realizations of some of the products of the company. The company’s net profit jumps to Rs.333.40 million against Rs.259.40 million in the corresponding quarter ending of previous year, an increase of 28.53%. Revenue for the quarter declines 5.34% to Rs.4196.90 million from Rs.4433.80 million, when compared with the prior year period. Reported earnings per share of the company stood at Rs.4.54 a share during the quarter, registering 28.53% increase over previous year period. Profit before interest, depreciation & tax is Rs.871.90 millions as against Rs.769.80 millions in the corresponding period of the previous year.”
“At the current market price of Rs 138, the stock P/E ratio is at 5.04 x FY13E and 4.16 x FY14E respectively. Earning per share (EPS) of the company for the earnings for FY13E and FY14E is seen at Rs.27.41 and Rs.33.14 respectively. Net Sales and PAT of the company are expected to grow at a CAGR of 10% and 29% over 2011 to 2014E respectively. On the basis of EV/EBITDA, the stock trades at 2.88 x for FY13E and 2.59 x for FY14E. Price to Book Value of the stock is expected to be at 0.56 x and 0.49 x respectively for FY13E and FY14E. We expect that the company surplus scenario is likely to continue for the next years, will keep its growth story in the coming quarters also. We recommend ‘BUY’ in this particular scrip with a target price of Rs 156 for medium to long term investment,” says Firstcall Research report.
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