Accumulate Chambal Fertilisers, tgt of Rs 55: P Lilladher

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Accumulate Chambal Fertilisers, tgt of Rs 55: P Lilladher

Posted on: April 19th, 2009 and is filed under Brokerage Recommendations.

Prabhudas Lilladher has maintained its accumulate rating on Chambal Fertilisers and Chemicals with a target price of Rs 55 in its April 15, 2009 research report.

“Chambal Fertilisers and Chemicals (Chambal) is expected to get the KG basin gas from the current month. We believe that Chambal will add EBIT of Rs 636 million in FY10E on the back of de-bottlenecking of both the urea plants and use of the KG basin gas.”

“At present, Chambal has total debt of Rs 21,500 million, which consists of a long-term debt of Rs 18,000 million and working-capital debt of Rs 3,500 million. The company has a fertiliser bond of Rs 3,800 million in their books. They could book a provision for MTM losses on such bonds. We have assumed 5% discount i.e. Rs 190 million in our FY09E estimate. Chambal’s 90% of the urea business is on cost plus 12% post tax ROE (i.e. fixed earning) basis and shipping business is on time contract till FY10E. Hence, we believe that a downward pressure on earnings would be less. We maintain an “Accumulate” rating on the stock, target price of Rs 55,” says Prabhudas Lilladher’s research report.

Tags: accumulate, buy, Chambal Fertilisers, P Lilladher