Deepak Fertilisers & Petrochemicals - Poor chemicals performance drags overall profitability - Emkay

Reco: BUY
CMP: Rs131
Target Price: Rs172

- Q2FY13 results disappointed due to poor performance of chemicals segment. Revenues stood at Rs 6.9bn, 20% yoy, EBITDA at Rs 803mn, -24% yoy, PAT at Rs 406mn, -34% yoy

- Chem margins at 13.4% stood at all-time low. Volumes were impacted due to lower offtake of TAN & shutdown at IPA. However, ammonia costs are likely to ease by end of CY12 & chem volumes are likely to pick up in subsequent quarters

- Fert performance was encouraging. Revenues of Rs 3.4bn, 47% yoy was supported by higher trading. Fert EBIT grew by 29% yoy due to higher volumes of manufac. fert & trading

- Revise FY13/14 est downward by 14/12%to Rs 22.9/28.7. Revise target to Rs 172 (previous Rs 185). Maintain Buy; stock trades at attractive valuations of 4.6x FY14 earnings

Source : Equity Bulls

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