Wednesday, January 28, 2009

Stock Idea: Gujarat Alkaliies

Guj. Alkalies (Rs. 70.00)
BSE Code : 530001
Market Cap : Rs. 500 Cr.
TTM EPS : Rs. 43
Pmt Stake : 37 %
52W H/L : Rs. 203/55
P/E Ratio : 1.6x
Dividend : 35%
Established in 1973, Gujarat Alkalies & Chemicals Ltd (GACL) has emerged as the largest producer of caustic soda in India commanding a market share of 18% in domestic chlor-alkali industry. With Caustic-Chlorine being it’s prime product, company has diversified into value added products like sodium cyanide, sodium ferrocyanide, chloromethanes, hydrochloric acid, potassium carbonate, phosphoric acid (85%), hydrogen peroxide etc. Its product portfolio of 26 chemicals provides dual benefit to the company by hedging against any cyclical fluctuations in the Chlor-Alkali Industry. Presently, company derives nearly 65% revenue from chlor alkali business and the rest 35% comes from the other value-added product. Thus company cater to host of industries like textiles, pulp & paper, soaps & detergents, alumina, water treatment, petroleum, fertilizers pharmaceuticals, agrochemicals, dyes & dyes intermediates to name a few. Besides company has made its presence felt across the globe by exporting products to USA, Europe, Australia, Africa, Far & Middle East countries, China and South Asian markets. Notably,
GACL is accredited with IS/ISO 9001:2000, ISO 14001:2004 and IS 18001:2000 certifications
and has been ranked among the top 25 listed Companies in respect of excellence in Corporate Governance by The Institute of Company Secretaries of India for last three consecutive years.
Despite being one of the lowest cost producers, performance of GACL depends a lot on the prices of its product which are quite volatile due to market dynamics. Secondly it also faces threat from cheap imports although anti dumping duty has been imposed on import of products like caustic soda lye/flakes and potassium carbonate from various countries. For H1FY09, GACL has reported encouraging set of nos as sales increased by 35% to Rs 729 cr but PAT grew marginally to Rs 138 cr due to substantial fall in other income. It has already clockedan EPS of Rs 19 for first half. Last fiscal, company had got Rs.16 crore compensation for CTC phase out under Montreal Protocol and Rs.16.50 crore against carbon credit. Considering all the factors, company may end the current year with sales of Rs 1250 cr and PAT of Rs 180 cr on conservative basis. This works out to an EPS of Rs 25 on current equity of Rs 73.40 cr. Although company has taken a hit due to mark-to-market loss on derivative exposure, still its not substantial and within company’s tolerance limit. Having an gross block of Rs 2200 cr, reserves to the tune of Rs 1000 cr (Book value Rs 147), low debt equity ratio of 0.3:1, EV/EBIDTA of approx 2x times, it’s a value buy at current market cap of merely Rs 500 cr. Long term investors can buy at current levels for 50% gain in 12~15 months.

Intraday Trading Calls for 28th January

Indian Stock Market may open positive with gap up but very high volatility can be seen in today's trade.

Today's Intraday Stock Tips / Trading Calls (Keep strict Stop Loss for Each Trade):

SCRIP NAME

TRIGGER

PRICE

TARGET 1

TARGET 2

RPOWER

Buy Above

101.80

106.20

110.00

Sell Below

99.40

95.60

91.00

PUNJ LLOYD

Buy Above

94.60

98.65

104.00

Sell Below

91.70

88.20

84.00

BARTRONICS

Buy Above

70.60

75.15

80.00

Sell Below

68.20

65.15

62.00

CUMMINS (500480)

Buy Above

199.20

207.45

215.00

Sell Below

195.20

191.50

186.00

ROLTA

Buy Above

83.50

86.20

90.00

Sell Below

81.00

78.65

75.00

SUN TV

Buy Above

156.80

162.45

168.00

Sell Below

153.20

149.40

145.00

REL CAPITAL

Buy Above

401.70

412.50

425.00

Sell Below

394.20

385.20

375.00


GOOD LUCK

Disclaimer

The information in this publication is provided by http://www.moneybazzar.blogspot.com/ is intended for use for Readers & Traders . Every effort is made to provide accurate information, but http://www.moneybazzar.blogspot.com/ cannot guarantee the accuracy of the information or of the market analysis. This is a newsletter and is for informational purposes only. It is not a solicitation or offer to buy or sell futures. There is a high risk of loss in trading futures. You should not trade with money that you cannot afford to lose. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this newsletter. The past performance of any trading system or methodology is not necessarily indicative of future results.



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