Multi Baggers
Deepak Fert
BSE ID : 500645 NSE ID : DEEPAKFERT
RECOMMENDED PRICE 169.00
PEAK FROM RECO 1061.70 528.22%
CURRENT PRICE 619.00 Resource id #18
Deepak Fertilizers is one of the leading manufacturers of industrial chemicals and fertilisers in India. We initiate a 'BUY' on the stock with a target price of Rs 235.
Deepak Fertilizers and Petrochemicals Corp Ltd
Deepak Fertilizers and Petrochemicals is one of the leading manufacturers of industrial chemicals and fertilisers in India. The company operates in three business segments- chemicals, fertilisers and real estate.
The company has registered robust results for the quarter ending March 2014. The revenues from operations grew by 62 percent to Rs 1069.59 crores vs. Rs 659.67 cr. in the like quarter previous year. Operating profit climbed sharply by ~135 percent at Rs.165.45 crores as against Rs 70.39 crores in the previous year quarter. The adjusted net profit stood at Rs.91.66 crore for the quarter as compared to Rs 29.12 crore; registering a growth of ~215 percent. The robust profit growth was mainly due to strong performance of chemical segment. On the margins front, operating margin climbed about 480bps at 15.47 percent as against 10.67 percent while net profit margin expanded 416bps at 8.57 percent from 4.41 percent y-o-y.
The chemical segment registered a growth of 73 percent to Rs.752.70 crores in revenues in current quarter as against Rs.435.07 crores in the same quarter last year.
The technical ammonium nitrate (TAN) registered growth of 48 percent during the quarter on account of stable raw material prices as compared to the corresponding quarter of previous year. The agri-business grew by 32 percent at Rs 330.98 crores in the current quarter helped by continued focused approach on operational excellence, customer focus and the strong portfolio of brands as against Rs.249.91 crores in the like quarter last year.
Valuation
With volumes building up; expansion plans, strong brand loyalty by customers and strong financial performance; DFPC Ltd. growth prospects and profitability looks positive. We believe the company is trading at an attractive valuation at 5.76x and 4.9x of FY15EPS of Rs 29.31 and FY16EPS of Rs.34.50. We initiate a 'BUY' on the stock with a target price of Rs 235 (appreciation of about 40 percent) with the medium to long term investment horizon.
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Disclaimer & Disclosure: This document is prepared for our clients only, on the basis of publicly available information and other sources believed to be reliable. Whilst we are not soliciting any action based on this information, all care has been taken to ensure that the facts are accurate, fair and reasonable. This information is not intended as an offer or solicitation for the purchase or sell of any financial instrument and at any point should not be considered as an investment advise. Reader is requested to rely on his own decision and may take independent professional advise before investing. Hem Securities Limited, Hem Finlease Private Limited, Hem Multi Commodities Pvt. Limited, Directors and any of its employees shall not be responsible for the content. The person accessing this information specifically agrees to exempt Hem Securities Limited, Hem Finlease Private Limited, Hem Multi Commodities Pvt. Limited or any of its affiliates or employees from, any and all responsibility/liability arising from such misuse and further agrees to hold Hem Securities Limited, Hem Finlease Private Limited, Hem Multi Commodities Pvt. Limited or any of its affiliates or employees free and harmless from all losses, costs, damages, expenses that may be suffered by the person accessing this information due to any errors and delays. The companies and its affiliates, officers, directors, and employees, including persons involved in the preparation or issuance of this material may from time to time, have long or short positions in, and buy or sell the securities there of, company (ies) mentioned here in and the same have acted upon or used the information prior to, or immediately following the publication. Analyst Certification The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation of the research analyst(s) was, is, or will be directly or indirectly related to the specific recommendations and views expressed by research analyst(s) in this report.
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