Buy Gujarat Fluoro; target of Rs 468: Firstcall Research

“Gujarat Fluorochemicals Limited (GFL) is a part of the $2 billion INOX Group of Companies. INOX is a family owned, professionally managed business group, with interests in diverse businesses including Industrial Gases, Refrigerants, Chemicals, Carbon Credits, Cryogenic Engineering, and Renewable Energy & Entertainment. Gujarat Fluorochemicals Ltd. was incorporated in 1987 and promoted by INOX Leasing and Finance Ltd. It is a publicly listed company in the business of Organic Chemicals. It primarily manufactures Chlorofluorocarbons, Hydro fluorocarbons, Hydrofluoric Acid and PTFE (Teflon). Today GFL is India's largest manufacturer of refrigerants and has a technical collaboration with Atofina (now Pennawalt) US, a Fortune 100 company. It has a market capitalization close to US $ 1 Billion.”

“Gujarat Fluorochemicals Ltd. has reported net profit of Rs 1884.40 million for the quarter ended on September 30, 2011 as against Rs 495.70 million in the same quarter last year, an increase of 280.15%. It has reported net sales of Rs 5368.20 million for the quarter ended on September 30, 2011 as against Rs 1928.40 million in the same quarter last year, a rise of 178.38%. Total income grew by 151.74% to Rs 5462.60 million from Rs.2169.90 million in the same quarter last year. During the quarter, it reported earnings of Rs 17.15 a share.”

“At the current market price of Rs.415.00, the stock is trading at 7.27 x FY12E and 6.37 x FY13E respectively. Earning per share (EPS) of the company for the earnings for FY12E and FY13E is seen at Rs.57.10 and Rs.65.12 respectively. Net Sales and PAT of the company are expected to grow at a CAGR of 32% and 29% over 2010 to 2013E respectively. On the basis of EV/EBITDA, the stock trades at 4.60 x for FY12E and 4.06 x for FY13E. Price to Book Value of the stock is expected to be at 1.92 x and 1.48 x respectively for FY12E and FY13E. We expect that the company will keep its growth story in the coming quarters also. We recommend ‘BUY’ in this particular scrip with a target price of Rs 468 for medium to long term investment,” says Firstcall Research report.    

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