Stock Pick From Textiles & Fertilizer Sector

 
CMP:120     ​BSE CODE:500690      VOLUME:682274       FACE VALUE:2 

The fertiliser segment is expected to do well in H2FY17 on expectations of good rabbi season but pricing pressure on fertilisers could hamper revenue growth. The marginal increase in Capro-Benzene spread and commissioning of nylon plant are positives for industrial segment. GSFC is working on augmentation of its caprolactam-1 plant for a capex of Rs.75 crore and will be completed by March 2017.

It will help in setting of planned caprolactam plant with capacity of 5000 MT. Debottlenecking at Sikka complex is underway and is likely to be completed by March 2017. GSFC has planned Melamine -3 plant with capacity of 40000 MT by March 2018 which would add Rs.400 crore to top line. On visibility of growth, we recommend to BUY the stock with a target of Rs.135 with a stop loss of 112.

TRIDENT

 CMP:64.50     ​BSE CODE:521064     VOLUME:905830      FACE VALUE:10 

Trident is a terry towel, yarn and wheat straw-based paper manufacturer. On financial front, Trident’s revenue increased 26.93 per cent to Rs.2325 crore in H1FY17 on a yearly basis. The company’s EBITDA too rose 27.8 per cent to Rs.477 crore in H1FY17 as compared to same period in the previous financial year. Its net profit also boosted 40.95 per cent to Rs.159 crore in H1FY17 on a yearly basis. On segmental revenue front, Trident has earned 78.39 per cent from textiles and remaining 21.61 per cent from paper & chemicals in FY16. On geographic segmental revenue front, it has earned 13.1 per cent from the USA and remaining 86.9 per cent from rest of the world in FY16. The net debt-to-equity ratio of the company improved to 1.4x as on Q2FY17 from 1.9x in FY16. Its ROE and ROCE stood at 14.36 per cent and 8.99 per cent respectively in FY16. On strong financials, we recommend to BUY the stock with a target price of 73 with a stop loss of 60