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You are here : IndiaNotes >> Research & Analysis >> Companies >> Fertilisers and Chemicals Travancore Ltd. >> Research

Fertilisers and Chemicals Travancore: Accumulate for long term perspective

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Company Overview


FACT a Government of India Enterprise has business interests in manufacturing and marketing of fertilizers, caprolactam, engineering consultancy and fabrication of equipments. Units of FACT include the two manufacturing divisions Udyogamandal Complex-UC and Cochin Division-CD, the consultancy unit FACT Engineering and Design Organization-FEDO, the fabrication division FACT Engineering Works-FEW and the Marketing Division. The Company has also interests in petrochemicals, hydrometallurgy, chemicals and pharmaceuticals.


Valuation Conclusion


FACT is the country's first fertilizer plant. lts revival and capacity expansion would boost supply in Kochi and entire South India. Company stood to gain some relief by way of a marginal increase in Factamfos subsidy. Supply of natural gas to FACT, which was forced to buy at a higher rate of USD 22 per mmbtu, is now at USD 9.5 per mmbtu. The Modi government within three years in office has not only provided the loan but also revived the Kochi terminal for supply of natural gas to the plant, Stabilization of the prices of raw-material and RLNG are positive signals leading to the profitability of FACT.


With the optimum capacity utilization of the existing plants and new projects for expansion and modernization, FACT is expecting a turnaround in its performance and profit on a sustainable basis in the coming years.


We are not estimating the share price of the company. Supported by the new initiatives, improved government policies, normal monsoon, falling fertilizer prices, reduction in raw material prices, the fertilizer industry is poised to witness a multiplier effect in the coming years & would definitely lead to improved profitability 84 margins for FACT in years ahead, we recommend to accumulate the stock for long term perpective (2 3 years)

 


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