Fwd: Fertiliser Sector Update; Q2FY12 performance remains encouraging

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Deepak Vaishnav

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Oct 30, 2011, 8:53:19 AM10/30/11
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Fertiliser Sector Update

Q2FY12 performance remains encouraging

 

n     Q2FY12 results for agri-inputs universe (ex Tata Chemicals, results pending) has been encouraging with revenues and APAT above our est by 10% and 14%, respectively

n     Companies’ fertiliser division performance has been encouraging due to sharp increase in fertiliser prices despite 140bps yoy / 80bps qoq decline in EBIT margins to 11.7%

n     Chemical segment margins also remain robust with EBIT margins at 30% (+20bps yoy / 150 bps qoq)

n     Post the results we have upgraded earnings for DFPCL while Rallis has seen downgrade. Chambal (upgrade) has been adjusted for withdrawal of its shipping demerger

n     Managements outlook on agri business (fertilisers and agrochemicals) remain positive on account of encouraging outlook for Rabi crop and strong farm produce prices

n     We expect that while rising input cost may put pressure on chemical segment margins in subsequent quarters global slowdown may also hurt demand

n     Raw material availability for complex fertiliser remain our key concern while any further price increase in complex fertiliser prices may hamper fertiliser demand

n     UPL and DFPCL are our top pick post the results along with GSFC (BUY on attractive valuations) and Coromandel (earnings momentum to continue)

n     We also recommend BUY on Tata Chemicals pre results on expectation of strong Q2FY12 results

 

Company

CMP

TP

Current
Reco

Previous
Reco

Earnings change

FY12

FY13

Chambal Fertilisers

88

98

Accumulate

Buy

3%

-4%

Coromandel Int'l

333

435

Buy

Buy

NA

NA

Deepak Fertilisers

165

250

Buy

Buy

6%

10%

GNFC

91

135

Buy

Buy

NA

NA

GSFC

461

530

Buy

Buy

NA

NA

Rallis India

160

197

Buy

Buy

-10%

-6%

United Phosphorus

142

215

Buy

Buy

1%

0%

Tata Chemicals

312

400

Accumulate

Accumulate

NA

NA

Source: Emkay Research

*Tata Chemicals will declare its results on 11th Nov, 2011

 

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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