Tuesday, September 9, 2008

Stock Idea: Goa Carbon

A part of the Dempo group, Goa Carbon has had an exceedingly good first quarter, carrying forward the winning stroke it had in FY08. A simple change in sales strategy has put the company on the firm path to superlative growth.

Net sales rose by a whopping 130% on a YoY at Rs.109.60 crore. EBIDTA doubled up from Rs.4.04 crore to Rs.19.16 crore. PBT was up more than 10 times at Rs.19.16 crore. The company had a MTM forex loss of Rs.8.56 crore. PAT was up over 8 times at Rs.11.63 crore. What is noteworthy here is that for entire FY08, the company had posted a PAT of Rs.17.32 crore

And this change in fortunes was brought about due to the change which the company made in its sales policy, starting from January 08’. It started selling on a spot basis instead of forward contracts. This helps the company sell CPC at an average rate of over $500-550 per tonne as against the price of $350-400 per tonne it was selling earlier. It also stopped selling on credit and this too helped.

It currently has a manufacturing capacity of 2.40,000 tpa, making it the second largest after Rain Commodities, which has a capacity of 6,00,000 tpa. It exports 25% of its production while the rest is sold to consumers in aluminium, titanium dioxide and metallurgical chemical industries. Of this, aluminium manufacturers account for 75% of the business, meaning its fortunes are closely linked to that of the aluminium sector.

The company has chalked out a capex of Rs.480 crore to set up a greenfield plant to produce up to 5 lakh tpa of CPC with a co-generation power plant of 40 MW.

The stock price has moved up sharply in August and currently it is hovering in the range of Rs.130-136. Stay invested, infact at every dip, accumulate the stock.
Source: sptulsian.com


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