GNFC- Expect strong Q4FY11 performance :: Emkay

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GNFC

Expect strong Q4FY11 performance

BUY

CMP: Rs 108                                       Target Price: Rs 157

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n     We expect GNFC to post strong Q4FY11 results (APAT of Rs 902 mn against loss of Rs 383 mn) leading to FY11 PAT revision by 14% and AEPS of Rs 14.1 (previous Rs 12.4)

n     Prices of company’s key chemicals like Nitric acid, Formic acid, Methanol etc have increased by 15-20% resulting into higher margins despite increase in input cost

n     Insurance claim of Rs 1.4 bn is likely to boost the profitability for Q4FY11 / FY11. Resulting FY11 reported PAT to be higher by 45% than our estimated APAT of Rs 2.2 bn

n     Stock trades at compelling valuations of 4.8 x FY12E EPS, 3.3x EV/EBITDA and 30% discount to its FY11 BV of Rs 144. We reiterate our BUY recommendation on the stock