Deepak Fertilisers (2QFY15) : No respite. Maintain SELL :: HDFC Securities, PDF link

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2QFY15 highlights
 Chemicals : Manufactured volumes were lower due to
unavailability of gas and weak TAN demand. Sales
volumes were as follows: TAN -28% YoY, Methanol -
99%, IPA +6%, nitric acid +13%. Trading revenues
increased from 17% to 37% YoY.
 Fertilisers : Due to a lack of gas availability,
manufactured fertilisers’ volumes were nil. Higher
trading led to a fall in PBIT margins by 800 bps to 2.8%.
Concerns continue
 Gas supply/price : Govt stopped the gas supply of ~0.5
mmsmscd to DFPC (non-urea user), the full impact of
which is visible from 2QFY15. The matter is currently
sub-Judice, with the co. having a strong case in our
opinion. In our base case, we have assumed restoration
of supply of RLNG (~0.2 mmscmd). Lack of pricing
power will significantly hit the margins.
 Ishanya Mall, a drag : PBIT loss was Rs 39mn (vs loss of
Rs 41mn YoY). PBIT loss in FY14 was Rs 213mn and
capital employed in this business is ~Rs 2.5bn.

LINK
http://www.hdfcsec.com/Share-Market-Research/Research-Details/StockReports/3009611