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You are here : IndiaNotes >> Research & Analysis >> Companies >> Shree Pushkar Chemicals & Fertilisers Ltd. >> Research

Shree Pushkar Chemicals reports strong PAT growth in Q1FY18; Buy

SPA Securities | 10 Aug, 2017  | Follow Author | Add to my Favourites 
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Shree Pushkar Chemicals & Fertilizers (SPCF) reported strong ~24%/16% YoY growth in Q1FY18 revenue/PAT driven by increased contribution of dyestuff segment (20% of revenue) and ~46% volume growth in fertilizer segment. Additional dyestuff capacity of 3000 MTPA is expected to be operational by H1FY18. Completely integrated dye business coupled with textile auxiliary chemicals plant would help SPCF to become a complete Textile Solutions Provider company. We maintain buy rating on the stock with target price of INR 240 valuing core business at 11x of FY19E earning.


Highlights:


- EBITDA margin expansion of ~100 bps YoY


- Additional Dyestuff capacity of 3000 MT to be operational by H1


- NPK, SOP to boost fertilizer segment growth


Outlook & Valuation


SPCFs revenue/PAT grew at ~13%/~42% CAGR between FY14-17. We estimate revenue/PAT CAGR of ~29%/49% between FY17-FY19E majorly on account of additional dyestuff capacity of 6000 MTPA. EBITDA margins are expected to expand by ~200bps to ~19+% between FY17-19E. Prices of dye intermediates such as H-acid (INR 350/kg) and Vinyl Sulphone (INR 250/kg) have stabilized and we expect prices to firm up in coming quarters. Flactuations in prices of dye/dye intermediate on account of developements in China is a major risk for business. Management indicated some initial hiccups to stabilize newly commissioned dyestuff business in FY17; we expect smooth operations and rapid increase in utilizations going further. With increasing exports revenue and installation of Auxillary chemicals plant, SPCF will consolidate its position in domestic dyestuff market. We maintain buy rating on the stock with target price of INR 240 valuing core business at 11x of FY19E earning


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About SPA Securities

SPA Securities was promoted by a team of finance professionals in 1995 with an objective to provide value added financial services. Initially, the Group focused as a niche financial solutions provider in corporate finance and wealth management to Indian companies and high net worth individuals. In January 2000, the Group expanded its operations and the range of services. Today, SPA provides services for securities broking, merchant banking, wealth management, financial advisory, corporate finance , risk management and insurance broking.

 

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