Gujarat State Fertilizers & Chemicals Ltd - Outperformance achieved by higher production - Emkay

Reco: REDUCE
CMP: Rs 357
Target Price: Rs 350

- Q1FY13 results were better than est driven by better chemicals performance & higher other income. Revenues stood at Rs 14.1bn, 17% yoy while PAT at Rs 1.7bn, -3% yoy.

- Chemicals revenues were supported by higher volumes of caprolactam/ nylon & intermediates trading as company achieved record level production in the quarter.

- Though chemicals outperformed in Q1; however outlook remains weak. Capro-benzene spreads have declined further by 18% to $1100/mt (Q1FY13 avg spreads stood at $1350/mt).

- We maintain our reduce rating since margin pressure in chemical segment continues and await for reversal in chemical spread.

Source : Equity Bulls

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