Chemfab Alkalies Q3FY17: Firstcall are overweight for medium to long term investment

Firstcall India Equity | May 18, 2016, midnight


SYNOPSIS

  • Chemfab Alkalis Limited manufactures and sells inorganic chemicals in India and internationally.
  • Revenue for the quarter rose by 27.79% to Rs. 305.80 mn from Rs. 239.30 mn, when compared with the prior year period.
  • During Q3 FY17, EBIDTA is Rs. 100.40 mn as against Rs. 61.80 mn in the corresponding period of the previous year, an increase of 62.46%.
  • During the quarter, net profit jumps to Rs. 56.30 mn from Rs. 13.30 mn in the corresponding quarter ending of previous year, an increase of 323.31%.
  • During Q3 FY17, Profit before tax grew 280.19% at Rs. 78.70 mn against Rs. 20.70 mn in Q3 FY16.
  • EPS of the company stood at Rs. 6.14 during the quarter, as against Rs. 1.45 per share over previous year period.
  • During nine months ended December 31, 2016, revenue stood at Rs. 925.50 mn as compared to Rs. 720.50 mn during the same period of previous year, up by 28.45%.
  • During 9M FY17, Net profit of the Company increased by 244.51% to Rs. 172.60 mn from Rs. 50.10 mn in 9M FY16.
  • Net Sales and PAT of the company are expected to grow at a CAGR of 10% and 38% over 2015 to 2018E respectively.


OUTLOOK AND CONCLUSION

  • At the current market price of Rs.300.75, the stock P/E ratio is at 12.02 x FY17E and 10.31 x FY18E respectively.
  • Earning per share (EPS) of the company for the earnings for FY17E and FY18E is seen at Rs. 25.03 and Rs. 29.18 respectively.
  • Net Sales and PAT of the company are expected to grow at a CAGR of 10% and 38% over 2015 to 2018E respectively.
  • On the basis of EV/EBITDA, the stock trades at 6.32 x for FY17E and 5.48 x for FY18E.
  • Price to Book Value of the stock is expected to be at 1.73 x and 1.51 x for FY17E and FY18E respectively.
  • Hence, we say that, we are Overweight in this particular scrip for Medium to Long term investment.

 

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