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SHARETIPSINFO >>Research Reports >>FERTILISER AND CHEMICAL TRAVANCORE LTD (09-04-2009)

 

LISTING
CMP
Rs 24
52 WEEK HIGH/LOW
Rs 42/Rs 14
FACE VALUE
Rs 10
PE RATIO
8
Volume
32656
MARKETCAP
Rs 1452 CRORE

COMPANY OVERVIEW:
FACT, India's first large scale fertilizer unit was set up in 1943. In 1947, FACT Udyogamandal started production of Ammonium Sulphate with an installed capacity of 10,000 MT Nitrogen. FACT became a Kerala State Public Sector Enterprise on 15th August 1960 and 21st November 1962, the Government of India became the major shareholder.


Product and Sales Mix:


PRODUCT NAME

SALES

%OF TOTAL SALES

1.FERTILISER

340.47

59.32

2.CAPROLACTUM

148.58

25.89

3.AMMONIUM SULPHATE

7.38

7.38

4.SPIC UREA

3.49

3.49

5.UREA

2.15

2.15

6.MIXED MANURES

1.1

1.1

7.OTHERS

0.2

0.2

8.SODA ASH

0.19

0.19

9.MOP(MURIATE OF POTASH)

0.15

0.15

10.NITRIC ACID

0.05

0.05

11.FERTILISERS

0.01

0.01

TOTAL

503.77

100

NEW FERTILISER POLICY:
According to new fertilizer policy, govt will not fix the producer’s price for the new units. Each new unit will be free to decide the price at which it wants to sell its product. However, the domestic fertilizer prices for the farmer will continue to be regulated. The international price-parity formula for the domestic urea manufacturer would be adopted.

SECTOR OUTLOOK:
According to new fertilizer policy, govt will not fix the producer’s price for the new units. Each new unit will be free to decide the price at which it wants to sell its product. However, the domestic fertilizer prices for the farmer will continue to be regulated. The international price-parity formula for the domestic urea manufacturer would be adopted.

INVESTMENT LOGIC:
Company has shown a turnaround in operation in the recent quarter.
Sale in the Q3FY2009 is whopping up by 389% as compared to Q3FY2008.
Fertilser Industry is seeing getting deregulation. The deregulation will see the rerating of the stock.
The gas supply from D6 block of the KG basin by RIL will ease the input pressure on the fertilser producing company. This will helps the companies to operate at full capacity.
The input cost has seen the recent time will help increase the operating profit margin of the company.
We are expecting a total re-rating of the sector, so every company operating in this sector will see new price in the year to come. 
As cropping season is nearing, the fertilizer stocks are going to be in demand.
Govt push in agri sector will help fertilizer companies realize  better income.
Rationalization of fertilizer subsidy structure in the coming year could be another boon for the sector.

SHAREHOLDING PATTERN:

 

 

NO.OF SHARES

% TOTAL

PROMOTERS

348050200

 

98.11%

INSTITUTION

1624680

 

0.46%

GENERAL PUBLIC

5097094

 

1.43%

GRAND TOTAL

354771974

 

100%

FINANCIAL:

 

 

31/03/05

31/03/06

31/03/07

31/03/08

TOTAL SALES

1196.46

1405.57

1480.91

891.28

EXPENDITURE

-1195.03

-1419.59

-1507.99

-983.32

OPERATING INCOME

1.43

-14.02

-27.08

-92.04

DEPRECITAION

-65.74

-65.27

-57.18

-45.31

PBIT

 

-64.31

-79.29

-84.26

-137.35

INTEREST

 

-34.42

-39.45

-50.73

-57.27

PBT

 

-98.73

-118.74

-134.99

-194.62

EXTRA ORD INCOME

10.01

355.03

0

200

TAX

 

0

-0.54

-0.3

-0.3

PAT

 

-88.72

235.75

-135.29

5.08

 
CHANGE IN INCOME, OPERATING INCOME AND NET PROFIT:

COMPARISION OF Q3FY2009 WITH Q3FY2008:

 

 

31/12/07

% CHANGE

31/12/08

TOTAL INCOME

148.44

389.78%

 

726.92

EXPENDITURE

-181.86

 

 

-732.16

OPERATING INCOME

-33.42

84.32%

 

-5.24

DEPRECIATION

-9.68

 

 

-11.16

PBIT

 

-43.1

 

 

-16.4

INTEREST

 

-11.36

 

 

-10

PBT

 

-54.46

 

 

-26.4

EXTRA ORD INCOME

0

 

 

31.68

TAX

 

0

 

 

0

PAT

 

-54.46

109.69%

 

5.28

KEY HIGHLIGHTS:
Total Income has increased by 389.78%.
Operating Income up by 84.32%.
Net Profit surged by 109.69%. Company made profit in Q3 FY2009 as compared to loss of 54.46 crore in Q3FY2008.

VALUATION:
We expect the operation of the company will become more efficient as the regulatory hurdles are easing on the fertilizer companies. We are of the opinion this is right time to start accumulating on the counter as slight improvement in the performance will dramatically affect the profitability of the company. We feel investor would be getting 25-30% return from this level in 6 to month time.
As the monsoon is also nearing these fertilizer companies are expected to do better than rest of the counter.


CONCLUSION:
Investor with 6 to 8 month time horizon should start accumulating the stock on every dip. We expect a return in range 25-30% from the counter

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