Nagarjuna Fertilizers & Chemicals Ltd - Q3 FY11 Result Update
The stock looks attractive at current valuation considering the outlook of new capital expenditure in fertiliser sector. Possible decontrol of urea price could rerate the sector outlook.
- (1888PressRelease) February 10, 2011 - * Nagarjuna Fertilizers & Chemicals Ltd (NFCL) outperformed street expectations with robust topline growth of 40% YoY to INR 8,535mn in Q3 FY11.
* EBITDA for the quarter stood at INR 1,144mn, up 25.5% YoY. EBITDA margin dropped by 154bps to 13.4%.
* Net profit expanded by 175% YoY to INR 334mn. Net profit margin rose by 191bps to 3.9%.
Outlook & Valuation
The stock looks attractive at current valuation considering the outlook of new capital expenditure in fertiliser sector. Possible decontrol of urea price could rerate the sector outlook. NFCL would also gain from investment in 6mn MTPA crude oil refinery at Cuddalore, Tamil Nadu; which is expected to commission by FY13. (NFCL holds 51% stake in Nagarjuna Oil Corporation Limited.) The stock is trading at 7.6x its FY12E earnings. We maintain BUY on the stock with reduced price target of INR 34.
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