GSFC -Reiterate BUY on compelling valuations - BUY ::Emkay

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GSFC

Reiterate BUY on compelling valuations

BUY

CMP: Rs 356                                       Target Price: Rs 530

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n     Q4FY11 results were in line with estimates- Revenues of Rs11.1bn,+43% yoy, APAT (adjusted for Rs 145 mn EO income) of Rs 1.95bn, +52% yoy

n     Chemicals segment margins at 34.7% continues to remain strong (+320bps yoy) while fertiliser segment witnessed margins of 21.7% against losses in previous year

n     Upgrade FY12E estimates by 11% to Rs 73.6 and introduce FY13E (EPS of Rs 78.8). Company holds cash in books and investments of Rs 150 / share (42% of cmp)

n     Despite expected deceleration in earnings by 18% in FY12 due to softening chemical prices, valuations remain compelling with EV/EBITDA of 1.8x and 20% discount to BV