Accumulate GSFC - Result Updated - Emkay

Reco: ACCUMULATE
CMP: Rs 388
Target Price: Rs 530

Results inline; maintain Accumulate

- GSFC reported in line performance- sales of Rs 13bn, 6% yoy, APAT of Rs 1.7bn, -15% yoy. EBITDA margins declined 590bps yoy/410bps qoq to 19.8% due to lower chemical margins.

- Fertiliser EBIT margin at 15.3% (est 13%) was ahead of est while chemical margin at 26.6% (est 28%)was lower than est. Decline in chemical margins is in line with decline in spreads.

- Caprolactam-benzene spread bounced back to $1710/mt in Jan'12 compared to low of $1480/mt in Dec'11. However, est remain unchanged as we had factored spreads of $1700/mt.

- Earnings have started decelerating from Q3FY12 due to decline in spreads. We maintain Accum with TP of Rs 530 despite attractive valuations due to declining trend in spread.

Source : Equity Bulls

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