GSFC- Results in line with estimates BUY :Emkay

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GSFC

Results in line with estimates

BUY

CMP: Rs397                                        Target Price: Rs530

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n     Q1FY12 results were in line with estimates with APAT of Rs 1.77bn, +63% yoy. Reported sales of Rs 12.1bn, 13% yoy excludes inventory gain of Rs 441mn

n     Chemicals segment margins at 38.7% (1700bps yoy/400bps qoq) surprised positively. Fertilizer segment margins improved 160bps yoy to 15.0% (in line with est)

n     Caprolactam-benzene spreads declined to $2,145/mt from $2,242/mt in Q4 FY11. Spreads to witness further contraction in FY12 as caprolactam prices retreat from their peak

n     We continue to maintain our BUY recommendation on the stock based on compelling valuations, FY12 EV/EBITDA 2x, 10% discount to BV