BUY GSFC - Cash machine ::Emkay

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��

GSFC

Cash machine

BUY

CMP: Rs 434                                       Target Price: Rs 530

---

n     Caprolactam prices rebound to $3580/mt in Sep’11 compared to $3190/mt in June’11. Revival in demand led by tightening supply & increasing participation of downstream buyers

n     Spreads bounce back & reach all time high of $2465/mt. Spreads likely to remain intact as maintenance shutdown globally in Oct (13% of global capacity) squeezes supply

n     Driven by strong margins in chemical & improved fert performance, cumulative operating cash generated (after working cap) will increase to Rs36bn during FY09-13 compared to Rs18bn from FY04-08

n     Upgrade est by 15% to Rs 84.6 to reflect improving chemical spreads. With 45% of cmp in cash & equivalents & FY12 EV/EBITDA of 2.2x, P/E of 5x, stock remains attractive