GSFC Another robust quarter BUY CMP: Rs427 :Emkay

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GSFC

Another robust quarter

BUY

CMP: Rs427                                        Target Price: Rs530

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n     GSFC continued strong show with Q2FY12 PAT at Rs 2.12 bn (+3% yoy on strong base) above our est driven by strong performance of fertiliser and chemicals

n     Fertiliser EBIT margins at 15% (est 11%) and chemical margins at 34.3% (est 35%), driven by higher spread in caprolactam, supported PAT growth despite lower revenues

n     Despite lower than est revenues, strong performance below the EBITDA line driven by lower than est interest, depreciation and higher other income boosted PAT

n     With 48% of cmp in cash and equivalents and FY12 EV/EBITDA of 2.0x, P/E of 5x, stock offers attractive investment opportunity. Re-iterate BUY with TP of Rs 530