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SHARETIPSINFO >>Research Reports >> NAGARJUNA FERTILISER & CHEMICAL LTD (02-03-2009)
LISTING |
|
|
Rs 18.80 |
|
Rs 54/12.50 |
|
Rs 10 |
PE RATIO |
9 |
P/BV |
0.66 |
VOLUME |
4098044 |
MKT CAP |
Rs 588 crore |
COMPANY OVERVIEW:
Nagarjuna Fertilizer and Chemical Ltd. (NFCL) commenced operation in 1985. The company is flagship Company of Nagarjuna group. Today the NFCL has total asset base of Rs21 billion.
The broad portfolio of the company includes:
Nutrition solution: Micro and Macro fertilizers and farm management services.
Micro Irrigation system.
Distribution Network:
225 people strong marketing team is committed to provide total customer satisfaction. Company has distribution network in 15 states. It operates across the country through 3 zonal office and 30 regional offices.
Product Line:
PRODUCT NAME |
SALES |
%OF TOTAL |
1.OTHER SALES |
880.48 CRORE |
40.13% |
2.UREA |
618.09 CRORE |
28.17% |
3.UREA (TRADED) |
580.98 CRORE |
26.48% |
4.OTHERS (TRADED) |
46.41 CRORE |
2.11% |
5.OTHER FERTILSER(TRADING) |
46.11 CRORE |
1.87% |
6.IRRIGATION SYSTEM |
26.49 CRORE |
1.2% |
7.AMMONIA |
.03 CRORE |
0 |
AMBITIOUS EXPANSION PLAN:
NFCL is charting an ambitious expansion plan to expand its operating capacity from the current 1.2 million tones to about 1.7 million tons per annum. The expansion is being planned keeping in mind the availability of additional natural gas reserves in nearby Krishna-Godavari basin.
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 RATIONAL:
Sector is poised for rerating.
New fertilizer policy to attract investment in the sector.
Presently India has to import fertilizer due to shortage.
Gas supply from D6 by RIL will make available essential input to the fertilizer sector. This will help the fertilizer company to operate in full capacity and even go for expansion.
Ongoing expansion plan in the company will add to its top line and bottom line.
Stock is trading below its book value.
SHAREHOLDING PATTERN:
|
|
NO.OF SHARES |
%OF TOTAL |
PROMOTERS |
151130228 |
|
35.30% |
|
INSTITUTION |
22272159 |
|
5.20% |
|
GENERAL PUBLIC |
254779434 |
|
59.50% |
|
GRAND TOTAL |
428181821 |
|
100% |
|
FINANCE:
|
|
31/03/05 |
31/03/06 |
31/03/07 |
31/03/08 |
TOTAL INCOME |
1298.71 |
1473.39 |
1843.23 |
2213.43 |
EXPENDITURE |
-979.31 |
-1167.79 |
-1535.31 |
-1830.85 |
OPERATING PROFIT |
319.4 |
305.6 |
307.92 |
382.58 |
DEPRECIATION |
-121.36 |
-121.05 |
-124.09 |
-120.15 |
PBIT |
|
198.04 |
184.55 |
183.83 |
262.43 |
INTEREST |
|
-142.79 |
-130.99 |
-137.79 |
-162.97 |
PBT |
|
55.25 |
53.56 |
46.04 |
99.46 |
TAX |
|
-25.72 |
13.3 |
-14.33 |
-17.64 |
PAT |
|
29.53 |
66.86 |
31.71 |
81.82 |
CHANGE IN TOTAL INCOME:CAGR IN TOTAL INCOME IS 19.44%.
CHANGE IN OPERATING INCOME: CAGR IN OPERATING INCOME IS 6.2%.
CHANGE IN NET PROFIT: CAGR IN NET PROFIT IS 40.4%.
RATIOS:
|
|
31/03/05 |
31/03/06 |
31/03/07 |
31/03/08 |
|
EPS |
0.6897921 |
1.561785 |
0.740715 |
1.911236 |
|
OPM |
24.593635 |
20.74128 |
16.70546 |
17.28449 |
|
NPM |
2.2737948 |
4.537835 |
1.72035 |
3.696525 |
INTEREST COVER |
1.3869319 |
1.408886 |
1.334132 |
1.610296 |
COMPARISION OF Q3FY2009 WITH Q3FY2008:
|
|
31/03/07 |
%CHANGE |
31/03/08 |
TOTAL INCOME |
625.64 |
-13% |
|
544.31 |
EXPENDITURE |
-550.12 |
|
|
-468.84 |
OPERATING INCOME |
75.52 |
-0.07% |
|
75.47 |
DEPRECIATION |
-30.01 |
|
|
-30.48 |
PBIT |
|
45.51 |
|
|
44.99 |
INTEREST |
|
-37.42 |
|
|
-37 |
PBT |
|
8.09 |
|
|
7.99 |
TAX |
|
-2.62 |
|
|
-3.39 |
PAT |
|
5.47 |
-15.90% |
|
4.6 |
Key Highlights:
Total income was down by 13%.
Operating profit was down by just 0.07%, this is because decline in the input cost and increase in production efficiency.
Net profit down by 15.9% because of higher tax outgo and lower base effect.
VALUATION:
We expect the EPS in the FY2010 to be around Rs2.5.The stock is trading at 6.7x to FY2010E earning. We value the company at 12x on conservative basis this translate the price Rs30 per share. We very optimistic about the company and the fertilizer sector as whole. The story is now unfolding.
CONCLUSION:
Investor with at least one year time horizon should start accumulating the stock on every dip.
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