Wednesday, January 27, 2010

FERTILIZER Sector Research Reports

Indian Fertilizer Sector -- FITCH
Govt will continue to drive the fertilizer sector; with its control over existing and new capacity, import quantity, retail pricing, distribution, inputs, subsidy and key manufacturing entities.

Nagarjuna Fertilizers & Chemicals is likely to witness a strong quarter on the back of increased capacity and higher trading volume; Chambal Fertilisers & Chemicals would see muted profitability. Improving international urea prices and expectation of a new policy has created a
buzz around fertiliser stocks.

Deepak Fertilizers is one of the largest producers of industrial chemicals in the country. With expansion of TAN capacity and possible forays into new business segments the company presents an exciting future going forward.

The favorable happenings in the recent past augur well for the fertiliser sector and we believe that fertiliser stocks, rising from their troughs offer a great long-term investment opportunity.

With the demand picking up for fertilizers worldwide we expect the international prices of fertilizers and there raw material to remain firm in the near term.

Any positive outcome in the urea policy and uptrend in urea prices would be an upward trigger for Chambal, going forward. We expect PAT to grow at two year’s CAGR (FY09-12E) of 18.7% (v/s 11.1% in FY05-09). We maintain our ‘Accumulate’ rating on the stock on the basis of 8x at FY11E earnings.

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All opinions are based on my technical study; however, I do not vouch for the accuracy or the completeness of the matter. I am not liable for any potential damages that may be incurred while acting upon any information mentioned in this report. The views expressed are not of binding nature. The report is intended for a restricted audience & I am not soliciting any action based on it. Please exercise discretion and due diligence in making your decisions. Investments in Capital Markets are not my obligation or guarantee and are subject to investment risks. In no event will I be liable for any damages, including without limitation direct or indirect, special, incidental or consequential damages, losses or expenses arising in connection with this report or use thereof or inability to use by any party, or in connection with any failure of performance, error, omission, interruption, defect, delay in operation even if I am thereof, advised of the possibility of such damages, losses or expenses.