Fwd: GSFC Company Update; Cash machine; Buy; Target: Rs 530

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Deepak Vaishnav

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Oct 1, 2011, 3:49:53 AM10/1/11
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GSFC

Cash machine

 

BUY

 

CMP: Rs 434                                       Target Price: Rs 530

n     Caprolactam prices rebound to $3580/mt in Sep’11 compared to $3190/mt in June’11. Revival in demand led by tightening supply & increasing participation of downstream buyers

n     Spreads bounce back & reach all time high of $2465/mt. Spreads likely to remain intact as maintenance shutdown globally in Oct (13% of global capacity) squeezes supply

n     Driven by strong margins in chemical & improved fert performance, cumulative operating cash generated (after working cap) will increase to Rs36bn during FY09-13 compared to Rs18bn from FY04-08

n     Upgrade est by 15% to Rs 84.6 to reflect improving chemical spreads. With 45% of cmp in cash & equivalents & FY12 EV/EBITDA of 2.2x, P/E of 5x, stock remains attractive

 

Regards,

Rohan Gupta

Research Analyst | Emkay Global Financial Services Ltd. | www.emkayglobal.com | Email : rohan...@emkayglobal.com 

Board No. : +91-22-66121212 | Extn. : 248 | DID : 66121248 | Mob : +919619321479 |

 

 


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