GHCL Initiating Coverage Report By Emkay

Strong business fundamentals are neglected in current valuations

Initiate with BUY as cash flow generation remains strong

We believe, GHCL will continue to generate steady cash flows on the back of its cost leadership in soda ash business and improvement in performance of its textiles segment. We expect revenue/EBITDA/PAT to clock 6%/10%/21% CAGR during FY16-18E. After meeting future capex requirements, company will be able to focus on significant debt reduction from FY18. Valuations look attractive as the CMP of Rs 171, the stock is trading at 4.4x FY18 EPS. Valuing the stock at 6xFY18 our fair value for the stock works out to be Rs 228. We initiate our coverage report on GHCL with Buy rating.

GHCL Initiating Coverage_210616