Fwd: GSFC Company Update; Spreads decline; downgrade to Accumulate; Target: Rs530

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Deepak Vaishnav

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Dec 10, 2011, 12:13:39 AM12/10/11
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GSFC

Spreads decline; downgrade to Accumulate

 

ACCUMULATE

 

CMP: Rs443                                        Target Price: Rs530

n     Caprolactam prices declined by 26% from their all time high of $3580/mt in Sep-2011 to $2650/mt in the last week of November

n     Driven by decline in caprolactam prices, caprolactam-benzene spreads also declined to $1700/mt at the end of Nov-11 compared to $2465/mt during September

n     Sharp fall in spreads is likely to lead to deceleration in earnings for GSFC and growth is likely to remain suppressed in near future

n     We maintain FY12/FY13 est at Rs 84.6 / 78.4 since we have not built in aggressive spreads. However, downgrade the stock to Accumulate from BUY on recent run-up in stock

 

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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