Company Update: Bodal Chemicals Ltd - REDUCE - TP Rs.140 - Kotak

We interacted with Mr. Mayur Padhya, CFO Bodal Chemicals to understand the progress of the expansion plan. Management stated that, except for the phase I of the Dyestuff expansion, all other units are delayed either due to changes in safety guidelines, delay in getting approval or issues pertaining to the production of the key products. Management expects the incremental revenue in FY19E and FY20E will be in the range of Rs1.5-2 bn and margin likely to be in the range of 15-17% till all the units get stabilized. The management is upbeat about the dyestuff expansion plan and believes that, the recent uptick in Vinyl Sulphone and H-Acid prices shall support the final product prices and overall revenues. Given the execution delay of certain facilities, we have revised our earnings estimated downwards to Rs8.5 (earlier Rs8.8), Rs9.1 (earlier Rs10.8) and Rs10.8 (earlier Rs12.6) for FY18E, FY19E and FY20E, respectively. Despite the sharp fall in the stock price in the recent past, at current valuation of 14.8x/12.5x FY19E/FY20E revised earnings, the stock is fairly valued. Hence, we recommend REDUCE (earlier Accumulate) rating, with a revised target price of Rs 140 (earlier Rs164).

Shares of BODAL CHEMICALS LTD. was last trading in BSE at Rs.137.3 as compared to the previous close of Rs. 135.05. The total number of shares traded during the day was 181794 in over 2788 trades.

The stock hit an intraday high of Rs. 144.05 and intraday low of 136. The net turnover during the day was Rs. 25362890.

Source : Equity Bulls

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