So this article was last updated in mid-August and post that I have been tracking the articles I shared. But you are right, till the data updates we don’t have any direct visibility into ammonia prices. I have tried to find ways to track it in realtime but haven’t been able to. I guess these charts will update once a month or so, post which we can compare August and September averages which should give us a sense into ammonia prices and profitability from a raw material standpoint.
Couple of other things which I tracked which seem positive:
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Demerger – The co plans to demerge into three entities and re-list them in public (estimating in FY25) which should unlock value from a PE standpoint. But the market should start pricing this in with the news of the demerger. It’s about time, has been filed since almost a year now. Tracking it here
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Fertiliser Sales in NPK from volume standpoint have grown in July (August data is yet to arrive). You can track it here: https://www.fert.nic.in/monthly-bulletin
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Coal India’s production was higher in August. CIL is largest consumer of TAN for DFPCL in India. Reference article
I have taken a heavy position in this stock since past 9 months and haven’t moved it yet. I missed the rally when I did the mistake of exiting it around 250. But I am being data-driven atm (and hoping for good data in coming months).
Future potentials like Solar and Steel Grade Nitric Acid, Ammonia Profitability, Lift on TAN Export Ban, etc excite me in this stock. I do believe it’s a 3x opportunity in the next 15 months (only if things go in the right direction). Here’s my math:
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Company did an Annual EPS of INR 95.86 in March 2023. By end of December 2024, I am betting this to go upto INR 105. I am estimating this through all the opportunities I talked about earlier. It requires a 16% growth in their annual sales with 10% net profit margin.
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Now this could be completely wrong, but I do value this company at a PE of 18. The company has always been looked from a fertiliser co standpoint but with it’s transition towards speciality chemicals the PE should be higher especially as the demerger approaches.
P.S – Invested and biased. But if there are similar opportunities with less assumptions, please do let me know
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