Accumulate Chambal Fertilizers; target of Rs 185: Dolat Capital
Dolat Capital’s research report on Chambal Fertilizers
Chambal reported a strong 4QFY19 on the back of the newly commissioned Urea plant in Gadepan-3. Sales/EBITDA/Adj. PAT growth came in at 147.0/458.5/415.7% YoY to ` 26.1/4.1/2.4bn respectively. Gross margin contraction was due to higher RM prices, margins contracted by 730 bps YoY. The company reported a PAT of `919mn on account of an exceptional item of ` 1.97bn, which arose as the Ministry of Chemicals has not paid the additional fixed costs to urea units in India.
We value Chambal at 9.5x FY21 EPS and arrive at a target price of ` 185. We resume coverage and recommend investors to Accumulate.
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