| - | | Mangalore Chem. | 1623 | 18.4 | 40.9 | 48.9 | 5.54 | 19.2 | 5.6 | - |
| R C F | 5140.3 | 47.4 | 158.2 | 6.3 | 7.48 | 47.9 | 16.7 | 2.1 |
| Natl. Fertilizer | 4140.6 | 7.1 | 108.7 | -38.3 | 6.32 | 53.9 | 24.3 | 1.2 |
| Coromandel Fert. | 3757.3 | 81.9 | 209.8 | 108.2 | 12.12 | 118.9 | 7.9 | 2.9 |
| Zuari Industries | 2618 | 9.2 | 73.4 | -81.3 | 6.05 | 234.8 | 9.4 | 1.3 |
| Tata Chemicals | 4075.6 | 2.3 | 949.2 | 113.7 | 32.34 | 278 | 6.9 | 3.2 |
| GSFC | 3557.7 | 7.2 | 238.5 | -10.7 | 15.33 | 146.1 | 4.9 | 3.1 |
| GNFC | 3433.9 | 25.4 | 372.9 | 14.2 | 20.02 | 114.6 | 4.8 | 3.7 |
| Deepak Fertilser | 1040.9 | 24.9 | 100.3 | 7.9 | 20.38 | 85.6 | 7.5 | 4.1 |
| Chambal Fertiliser | 2720.1 | 5 | 203.8 | 16.1 | 20.03 | 64 | 13.1 | 2.8 |
| Nagarjuna Fertilser | 2193.6 | 20.8 | 22.5 | -29.1 | 14.74 | 31.2 | 59.4 | - |
| Oswal Chemical | 629 | 230.4 | 249.8 | 156.5 | 44.54 | 180.3 | 18.5 | - |
| Source: BS Research. Note: % ch is over 2007. |
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Coromandel Fertilisers
Coromandel Fertilisers, a leading player in the domestic fertiliser sector producing complex fertilisers including DAP, will also be a key beneficiary of the new policy. |
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| As the company imports almost 90 per cent of its raw material requirement, the benefits of import price parity would directly reflect in its margins and higher RoE going forward. |
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| The company has taken several strategic initiatives to optimise its cost structure. It has in the past secured sourcing of key raw materials such as rock phosphate by acquiring stakes in large global suppliers like Foskor, a leading global manufacturer of phosphoric acid. |
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| Besides, the company has been investing to grow inorganically, where it has completed several acquisitions including EID Parry's farm inputs division, Godavari Fertilisers (phosphate producer) and pesticide maker Ficom Organics. This has not only helped the company to scale up its business and diversify, but also enhanced its distribution network in the country. |
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| Meanwhile, the company is increasing its phosphate capacity to 3.3 million tonnes by 2009 as against the current capacity of 2.5 million tonne. The benefits of this will also be reflected in better efficiency due to economies of scale and higher volumes. |
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| Put together, the strategic steps, growth initiatives, thrust on increasing margins and volumes coupled with favourable policy on DAP, will drive the future growth and in a more profitable manner. At Rs 118.9, the stock is trading at 5.4 times its FY09 estimated earnings. |
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Gujarat State Fertilizers & Chemicals
Gujarat State Fertilizers and Chemicals (GSFC) is more diversified player and generates a part of its revenue from value added chemicals that enjoy operating margins between 15-40 per cent. Its fertiliser business accounts for 65 per cent of revenues and has wide product basket with exposure to Urea, DAP and so on. |
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| GSFC is the second-largest DAP producer in India and would be the key beneficiary of the recent policy announcement. For it's DAP capacities, the company has secured supply of phosphoric acid from its joint venture with JCT, Tunisia. |
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| This will not only increase the utilisation, but also help improve margins in the light of new policy. Also, as gas availability improves, it should lead to higher the utilisation of about 110 per cent, thus benefiting from import parity pricing. |
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| The company is also the country's largest producer of caprolactum, a critical industrial chemical used in textile yarn, tyre cord and as specialty chemicals for the textiles and leather industries. |
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| Accounting for about 80 per cent of total revenues of the chemicals division, contribution of the caprolactum business should rise as the company plans to expand its capacity of 70,000 tonne per annum to 120,000 tonne per annum by setting fresh capacities. |
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Additionally, the company is debottlenecking its existing caprolactum capacities by about 10 per cent at a cost of Rs 100 crore. The benefits of these expansions will be visible post FY10. Meanwhile the benefits of debottlenecking and the cheaper availability of the gas would drive growth. The stock is currently trading at 3.6 times its FY09 estimated earnings.
Tata Chemicals
Tata Chemicals generates about 46 per cent of its revenue from fertilisers, which includes urea and complex fertilisers, while the rest is contributed by other chemicals products and edible salt (non fertiliser division). |
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| The company is taking organic and inorganic initiatives, which should result in higher growth in the years to come. It recently acquired General Chemical Industrial Products Inc (GCIP) in the USA for a consideration of $1 billion. |
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| With this acquisition, the company has emerged as the world's second largest soda ash company with a global market share of 35 per cent (in soda ash) and an enhanced annual capacity of 5.5 million tonne. |
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| Through GCIP, Tata Chemicals will now be able to tap new markets including Latin America for its existing products. GCIP's estimated turnover is about $375mn (about Rs 1,600 crore). |
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| Besides, Tata Chemicals is expected to scale up DAP utilisation (currently at 50 per cent) as the availability of phosphorus is increasing on the back of its stake in Indo Maroc Phosphore S.A. (IMACID), Morocco, where it has acquired a strategic equity stake of 33.3 per cent (Chambal Fertilisers is also a partner in this joint venture). |
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| The stock is currently trading at attractive valuations of 8 times its expected consolidated FY09 earnings and 6.4 times of FY10 earnings. |
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