Deepak Fertilisers - Strong results, re-iterate BUY:: Emkay

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Deepak Fertilisers

Strong results, re-iterate BUY

BUY

CMP: Rs160                                        Target Price: Rs250

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n     Q1FY12 APAT at Rs 639 mn (+23% yoy) was above estimates due to higher fertilizer profits & lower interest costs

n     Chemical segment margins at 28.4% was in line with estimates (though lower by 530 bps yoy) and likely to remain stable despite rising input cost (mainly ammonia)

n     Fertiliser profit Rs 226 mn, +53% yoy, increased sharply due to inventory gain (Rs 40 mn) and strong margins in trading of specialty fertiliser

n     Introduce FY13 estimates at Rs 27.9 and roll over valuations to FY13E with TP of Rs 250 (9x FY13E EPS). Maintain BUY reco on attractive valuations