Chambal Fertilisers Withdrawal of shipping business demerger - Negative :Emkay,

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Chambal Fertilisers

Withdrawal of shipping business demerger - Negative

ACCUMULATE

CMP: Rs87                                        Target Price: Rs98

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n     Chambal’s Q2FY12 results were broadly in line with APAT of 841 mn, (-14%yoy) despite disappointment in shipping (EBIT loss of Rs 49 mn) and textiles (loss of Rs 90 mn)

n     Manufactured fertiliser and trading business posted encouraging results with EBIT margins of 16.8% and 6% respectively and expected to remain robust 

n     Withdrawal of proposed demerger of shipping is the biggest disappointment and is expected to put pressure on company’s earnings due to adverse business environment

n     Revise est to Rs 9.0/8.9 (from Rs 8.7/9.2) for FY12/FY13 resp. Trim target multiple and reduce target price to Rs 98 (from Rs 110) with downgrade to Accumulate (from BUY)