Deepak Fertilisers has 40% Upside: Hem Securities

The company has registered robust results for the quarter ending March 2014. The revenues from operations grew by 62% to Rs. 1069.59 crores vs. Rs. 659.67 cr. in the like quarter previous year. Operating profit climbed sharply by ~ 135% at Rs. 165.45 crores as against Rs.70.39 crores in the previous year quarter. The adjusted net profit stood at Rs. 91.66 crore for the quarter as compared to Rs. 29.12 crore; registering a growth of ~215%.The robust profit growth was mainly due to strong performance of chemical segment. On the margins front, operating margin climbed about 480bps at 15.47% as against 10.67% while net profit margin expanded 416bps at 8.57% from 4.41% y-o-y.

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Valuation

With volumes building up; expansion plans, strong brand loyalty by customers and strong financial performance; DFPC Ltd. growth prospects and profitability looks positive. We believe the company is trading at an attractive valuation at 5.76x and 4.9x of FY15EPS of Rs.29.31 and FY16EPS of Rs.34.50. We initiate a ‘BUY’ on the stock with a target price of Rs.235 (appreciation of about 40%) with the medium to long term investment horizon

Download Report On Deepak Fertlisers By Hem Securities