Emkay's research report on Gujarat State Fertilizers & Chemicals (GSFC)
Revenues at Rs 12.6bn were down 13%yoy, due to lower than estimated fertilizer sales volumes and lower than estimated chemical segment revenues
EBITDA at Rs 939mn (adjusted for EO of Rs 473mn) was down 34%yoy lower than our estimates. Increase in gas cost and ammonia cost impacted EBITDA margin which stood at 7.4%, lower than our estimates of 12.5%
Benzene caprolactam spread for Q3FY15 averaged at $980/tonne vs $920/tonne in Q2FY15.,With sharp correction in benzene prices, the spreads have since increased to ~$1,050/tonne currently
We have reduced our FY15E revenue and earnings estimates lower by 7% and 17% respectively while we continue to maintain our FY16E. We continue to maintain our Buy rating on the stock with a target price of Rs140
"We have reduced our FY15E earnings lower by 17% driven by weaker than estimated Q3FY15 results. We though continue to maintain our FY16E on the back of overall improvement in demand for the complex fertilizer business and improving capro-benzene spreads. We continue to maintain our Buy rating on the stock with a target price of Rs 140", says Emkay Global Financial Services research report.
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