Gujarat Alkaline and Chemicals Ltd: Followup

As expected the results did not justify the price movement. We all saw that market is trying to be stable to positive in last two days but this stock in particular is on a falling spree. you cannot see the daily falls as this is a weekly chart. The point over here is invest based on logic not by just following some one blindly.

Happy investing :)

Gujarat Alkaline Ltd: Result Update Q3 2013-14

* Results from BSEIndia.com

Revenues of the company have increased a good 21.54% but the increase in cost of power and fuel ensured that the rise in profits are not in line with the increase in sales. 

Readers will say cut the crap and tell me if I can buy at current levels or not ..

My answer to this question is: The recent price movement is not justified by the kind of results company has produced all its peers namely AB Chemicals, DCW etc are trading at 10-20% above the yearly lows where in this one is trading 10-12% below yearly highs. Having said that its good to stay with the leaders of the sector.

Money is yours so final decision rest with you.

Technically as well the stock is too far from my comfort level to invest in.

Happy investing

Disclaimer: Currently, I dont hold any shares in the company.. I sold my holding of 200 shares in July 2013

Result Update: GUJARAT ALKALIES & CHEMICALS

GUJARAT ALKALIES & CHEMICALS LTD

	Sep-12	Sep-11	Change YoY
Revenue	481.74	420.35	14.60%
Other Income	10.79	8.04
Total Income	492.53	428.39
Expenditure	-368.64	-336.93
Interest	-2.63	-4.51	-41.69%
PBDT	121.26	86.95	39.46%
Depreciation	-34.96	-35.23
PBT	86.3	51.72	66.86%
Tax	-20.29	-14.66
Net Profit	66.01	37.06	78.12%
Equity	73.44	73.44
EPS	8.99	5.05	78.02%
CEPS	13.75	9.84
OPM %	25.72	21.76
NPM %	13.7	8.82

As expected the results of the company showed strength as the increased prices of the products lead to booming bottom line. The profits of the company grew 78% to Rs 66 cr leading to EPS of ~Rs 9 per share for the quarter.

This is one of the companies enjoying increased prices of caustic soda and protected by anti dumping duty and available at the PE of 4-5 for the forward year 2012-13.

Comparing it with the peers like TATA Chemicals, DCW Ltd or Aditya Birla Chemicals, this one is the cheapest of the lot.

Invest with a expectations of 50% returns in two years which seems highly likely in the given case.

Old post: Click Here

Gujarat Alkalies and Chemicals

Background:

GACL was promoted in March 1973 by the Government of Gujarat (GoG) through its industrial investment arm, Gujarat Industrial Investment Corporation Ltd. (GIIC). It is the largest player in the domestic caustic chlorine industry with integrated operations 429,000 metric tonne per annum (MTPA) of caustic soda at its plants in Vadodara and Dahej as at March 31, 2012 (making it the market leader in the caustic soda industry). Its major products include caustic soda, liquid and gaseous chlorine, hydrogen peroxide, etc which find application in a wide range of industries, including the manufacturing of textiles, pulp and paper, aluminium, detergents, soaps, rayon, plastics, pharmaceutical and agricultural chemicals, etc. GACL’s manufacturing plants are located at Nandesari in Vadodara and Dahej near Bharuch. The Dahej complex also houses a gas-based captive power plant of 90 MW. In addition, the company installed totaled wind power plant for 21 MW.

Financials

Annual results:

(in Cr.)	2011 - 12	2010 - 11	2009 - 10	2008 - 09	2007 - 08
Income Statement
Revenue	1,710.97	1,435.41	1,315.87	1,420.54	1,133.63
Other Income	11.77	11.28	24.04	9.53	69.75
Total Income	1,722.74	1,446.69	1,339.91	1,430.07	1,203.38
Expenditure	-1,339.84	-1,166.71	-1,054.61	-1,034.75	-803.58
Interest	-20.53	-19.89	-17.48	-24.59	-25.33
PBDT	362.37	260.09	267.82	370.73	374.47
Depreciation	-138.95	-132.97	-121.55	-109.43	-98.96
PBT	223.42	127.12	146.27	261.3	275.51
Tax	-69.81	-12.81	25.57	-69.03	-51.43
Net Profit	153.61	114.31	171.84	192.27	224.08
Equity	73.44	73.44	73.44	73.44	73.44
Reserves	1,534.35	1,406.33	1,317.64	1,171.49	1,004.99
EPS	20.92	15.56	23.4	26.18	30.51
CEPS	39.84	33.67	39.95	41.08	43.99
OPM %	22.38	19.51	21.68	27.83	35.27
NPM %	8.98	7.96	13.06	13.53	19.77

 

 

 

Quarterly:

(in Cr.)	30-Jun	31-Mar	31-Dec	30-Sep	30-Jun	Mar-12 (Annual)
Income Statement
Revenue	441.05	427.4	443.38	420.35	420.64	1,710.97
Other Income	0.94	1.66	0.95	8.04	0.32	11.77
Total Income	441.99	429.06	444.33	428.39	420.96	1,722.74
Expenditure	-323.4	-319.13	-367.35	-336.93	-318.09	-1,339.84
Interest	-2.96	-4.03	-4.91	-4.51	-5.53	-20.53
PBDT	115.63	105.9	72.07	86.95	97.34	362.37
Depreciation	-34.61	-34.7	-35.91	-35.23	-33	-138.95
PBT	81.02	71.2	36.16	51.72	64.34	223.42
Tax	-25.75	-26.99	-10.22	-14.66	-17.94	-69.81
Net Profit	55.27	44.21	25.94	37.06	46.4	153.61
Equity	73.44	73.44	73.44	73.44	73.44	73.44
EPS	7.53	6.02	3.53	5.05	6.32	20.92
CEPS	12.24	10.74	8.42	9.84	10.81	39.84
OPM %	26.89	25.72	17.36	21.76	24.46	22.38
NPM %	12.53	10.34	5.85	8.82	11.03	8.98

 

Balance Sheet

Balance Sheet	Mar '12	Mar '11	Mar '10	Mar '09	Mar '08
	12 mths	12 mths	12 mths	12 mths	12 mths
Sources Of Funds
Total Share Capital	73.44	73.44	73.44	73.44	73.44
Equity Share Capital	73.44	73.44	73.44	73.44	73.44
Share Application Money	0	0	0	0	0
Preference Share Capital	0	0	0	0	0
Reserves	1,534.35	1,406.34	1,317.64	1,171.49	1,004.99
Revaluation Reserves	0	0	0	0	0
Networth	1,607.79	1,479.78	1,391.08	1,244.93	1,078.43
Secured Loans	241.43	217.14	237.98	254.34	164.95
Unsecured Loans	70.01	165.13	85.26	80.89	150.52
Total Debt	311.44	382.27	323.24	335.23	315.47
Total Liabilities	1,919.23	1,862.05	1,714.32	1,580.16	1,393.90
	Mar '12	Mar '11	Mar '10	Mar '09	Mar '08
Application Of Funds
Gross Block	3,161.25	2,769.24	2,686.47	2,480.91	2,217.72
Less: Accum. Depreciation	1,561.77	1,412.60	1,271.00	1,095.18	996.68
Net Block	1,599.48	1,356.64	1,415.47	1,385.73	1,221.04
Capital Work in Progress	43.26	293.46	176.05	101.29	42.76
Investments	161.08	156.2	140.51	117.28	120.51
Inventories	178.93	147.96	140.25	170.57	104.72
Sundry Debtors	250.44	279.85	263.55	248.1	193.91
Cash and Bank Balance	57.89	17.26	12.61	22.97	54.48
Total Current Assets	487.26	445.07	416.41	441.64	353.11
Loans and Advances	534.45	389.48	382.47	329.15	285.44
Fixed Deposits	0	0	0	0	0
Total CA, Loans & Advances	1,021.71	834.55	798.88	770.79	638.55
Deffered Credit	0	0	0	0	0
Current Liabilities	506.62	499.78	577.14	534.97	404.38
Provisions	399.7	279.02	256.9	296.85	263.94
Total CL & Provisions	906.32	778.8	834.04	831.82	668.32
Net Current Assets	115.39	55.75	-35.16	-61.03	-29.77
Miscellaneous Expenses	0	0	17.44	36.89	39.35
Total Assets	1,919.21	1,862.05	1,714.31	1,580.16	1,393.89
Contingent Liabilities	422	311.49	368.02	319.1	163.05
Book Value (Rs)	218.93	201.5	189.43	169.52	146.85

 

Investment rationale:

1.    The debt of the company has been reducing consistently over the period of years.

2.    Strong promoter holding: Promoters shareholding in the company is more than 36.72%

3.    Book value of the shares is Rs 226.57 ie 58% less than the current market price.

4.    Largest installed capacity of 429,000 MTPA highest in the industry and the company is working at 100% capacity compared to industry average of 70%

5.    The total operating income of GACL increased by 19% in FY12 on account of higher prices, which was offset by decline in sales volumes by 12% for its major products.

6.    Recent levy of anti-dumping duty on imports from Korea and other nations will help increase or at least stabilization of prices.

The stock is listed both at BSE:530001 NSE: GUJALKALI. The closing price of the stock was  Rs 132.1

Dividend: 30%

Add this stock on declines or buy immediately if moves past Rs. 140

Disclaimer: Author and his immediate family owns 200 shares of the company @ 131.5 since October 2012.