Buy Southern Petro; target of Rs 44: A C Choksi

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Buy Southern Petro; target of Rs 44: A C Choksi

A C Choksi is bullish on Southern Petrochemical Industries Corporation (SPIC) and has recommended buy rating on the stock with a target of Rs 44 in its July 16, 2011 research report.

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A C Choksi is bullish on Southern Petrochemical Industries Corporation (SPIC) and has recommended buy rating on the stock with a target of Rs 44 in its July 16, 2011 research report.

"SPIC, India's share is 16% in the total Global fertilizer consumption and for higher agricultural yields the demand for fertilizers is increasing further. Southern Petrochemicals Industries Corpn. Ltd (SPIC) has a production capacity of 6,06,100 MT of DAP per annum and in 2009-2010 DAP had recorded a growth of 42%. SPIC's Tuticorin Urea plant having capacity of 6,20,400 MTPA resumed production in October 2010 after shut down for nearly three and a half years. The Nutrient Based Subsidy (NBS) policy has put the fertilizer manufacturers in an advantageous position by decontrolling prices of certain fertilizers and allowing them to fix their own prices. SPIC had gone through the Capital Debt Restructuring (CDR) process and major operations had revived because of fresh infusion of equity capital by promoters and divestitment of some of the non-core assets. There has been turnaround in the financials of the company on account of revival of operations. In Q4FY2011 as against sales of Rs.863.56 crores, company reported Profit of 80.93 crores."

"Increasing demand for fertilizers, favorable Nutrient Based Subsidy policy, initiatives taken by promoters for reviving the company and re-commencement of urea production are some of the factors which are leading towards strong growth as well as earnings and profits of the company in the coming periods. Given the longterm growth prospects of SPIC , its recent revival, it is a suitable investment option for investors seeking long term exposure in the Fertilizers industry. We recommend a "BUY" call on the stock with a target price of Rs 44," says A C Choksi research report.

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To read the full report click on the attachment