Wednesday, August 25, 2010

Stock Idea: Atul Ltd.

Part of the Lalbhai group, Atul makes specialty and other chemicals and colors. For Q1FY11, it posted a flat set of sequential results, with net sales almost stagnant but thanks to the 325 drop in power and fuel costs, net profit going up 25%. But the improvement in margins is encouraging, especially NPM, which was at 6% compared to 4.83% in Q4FY10and 4.55% in Q1FY10.

During FY10, the company reduced its borrowings by Rs.64crore to Rs.284crore and this is going to bring down the interest outgo this current fiscal. Its polymers and colors segment have shown a strong rebound during Q4 and this is expected to continue into current fiscal too. It will be continuing to reduce its debt further and improve its working capital cycle. With focus on high margin products, new strategic business verticals, expansion of product portfolio and brand business, FY11 could be better. Also, the company has land with value of over Rs.1000 crore part of which can be monetized. The annualized EPS of Rs.27, on the current price, gives a discounting of less than 5 times.
Source: Internet (

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