Buy Liberty Phosphate; target of Rs 95: Sunidhi Securities

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Buy Liberty Phosphate; target of Rs 95: Sunidhi Securities

Sunidhi Securities is bullish on Liberty Phosphate and has recommended buy rating on the stock with a target of Rs 95 in its June 11, 2011 research report.

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Sunidhi Securities is bullish on Liberty Phosphate and has recommended buy rating on the stock with a target of Rs 95 in its June 11, 2011 research report.

"Incorporated in 1987, Liberty Phosphate is a Baroda-based manufacturing Single Super Phosphate (SSP) fertilizer. LPL carried out expansion from time to time to accelerate its capacity to cope up with the increasing demand. It had tapped the capital market with an IPO in May 1995. LPL has four manufacturing units situated at Udaipur (Rajasthan), Kota (Rajasthan) Nandesari (Gujrat) and Pali (Maharashtra). LPL manufactures and trades single super phosphate (SSP) in India. The company sells its SSP fertilizer under the Double Horse brand for various crops like oil seeds, groundnut, and potato. It also produces SSP in granulated form, called GSSP."

"Liberty Phosphate also makes nitrogen, phosphorus and potassium (NPK), fertiliser, soil conditioner, phospho bupsum, magnisium sulphates, and zinc sulphate. With installed capacity of 4, 63,000 tonnes per annum, LPL is one of the largest players in the SSP Industry. The company's state-wise SSP capacity is as follows: Rajasthan 800 tonnes per day (tpd), Gujarat 200 tpd, Maharashtra 150 tpd, and Madhya Pradesh 300 tpd. As SSP is a bulky product, transportation cost is high and, hence, with many plants spread over various parts of the country puts the company in an advantageous position. LPL's prestigious clients include Tata Chemicals, Zuari, GNFC, Chambal, Gujarat Agro Industries, Oil Federation and MP Agro Industries and various farmers."

"LPL can lay claim to be the catalyst in the transformation of Indian agriculture with high capacity and strong dealership network catering 13 states in the country directly as well as through co-partners and pioneer fertilizer companies like Chambal Fertilizers, GNFC, Zuari Industries, for its quality fertilizer it enjoys. For an industry dependent upon food grain production to meet the ever growing population, there is nothing but growth in store and the future outlook is positive. Recent policy initiatives by the Government pointing to decontrol augur well for the company since the Government wants to give subsidy to the farmers directly rather than routing it through fertilizer companies. The further expansion will increase its revenue & profitability going forward. At the CMP of Rs70, the share is trading at a P/E of 2.2x on FY12E and 2.1x on FY13E. We recommended Buy with a target price of Rs95 in the medium term," says Sunidhi Securities research report.

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To read the full report click on the attachment