Wednesday, January 27, 2010

Technical Call in NAGARJUNA FERTILIZER


NAGARJUNA FERTILIZER (35.65)

The weekly chart suggest an upside in the stock with a possible 1st target of 45 and a 2nd target of 54 with a stop loss of 31 (for traders).

The change in Govt Policy towards the Fertilizer Industry by giving Capital Subsidy and allowing additonal Urea Plants against its earlier complex fertilizer policy, makes Fertilizer stocks an attractive buy both as a trader as well as an investor.

According to FITCH the Indian Govt will drive the fertilizer sector to ensure food security so as to reduce burden on subsidy as crude looks weak in the medium term. They see a moderation in DEBT profile of all fertilizer coes.

NAGARJUNA FERTILIZERS & CHEMICALS LTD is the Largest Urea producer in South India. It has got 1.55 mmscmd of natural gas from Reliance via KG Basin 6 so as to enable it to shift from naptha to natural gas, thereby reducing its costing by 20% and increasing its OPM from 14% to 22%.

Besides this it is partnership with TATA PETRODYNE in refinery business and associated with International Companies in marketing of MICRO NUTRIENTS & SPECIALITY FERTILIZERS. Add to that is the revenue it will start getting from its subsidary NOCL at Cuddalore.

Projected EPS for FY10E is 1.70 and FY11E is 3.3 making its P/E at 20 & 10 respectively.

Happy Trading.

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