RCF - Getting aggressive on capex - Emkay

Reco: NOT RATED
CMP: Rs 54
Target Price: Rs NAv

- RCF is a leading domestic urea player with capacity of 2.3mn mtpa which accounts for 10.6% mkt share. RCF's industrial chemicals business contributes 10% / 15% to sales/ profits

- H1FY13 profits increased by 34% to Rs 1.3bn after flat APAT growth since previous four years (APAT Rs 2.5bn) despite sustained capex on improving efficiency

- Our recent meeting with management suggests that it has aggressive capex plans of Rs 187bn (current market cap of Rs 30bn) spread across next 5 years and is likely to be funded through debt, equity and JVs

- Though at current valuations of 13xFY12 P/E and 6.6x EV/EBITDA, stock is not cheap but future growth remains untapped. Currently the stock is not under our coverage

Source : Equity Bulls

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