Recommendation from Fertilizers & Cements Sectors
The scrips in this column have been recommended with a 15-day investment horizon in mind and carry high risk. Therefore, investors are advised to take into account their risk appetite before investing, as fundamentals may or may not back the recommendations.
GUJARAT STATE FERTILIZERS AND CHEMICAL LIMITED
CMP - Rs 87.35
BSE CODE : 500690
Volume : 87,612
Face Value : Rs 2
Target : Rs 97
Stoploss : Rs 79 (CLS)
Gujarat State Fertilizers and Chemicals Limited is engaged in business of development of crop nutrition solutions. The two segments in which the company operates are fertilizer products and industrial products. According to the consolidated quarterly results, the net sales rose by 18.74 per cent from Rs 1,807.37 crore in Q3FY20 to Rs 2,146.14 crore in Q3FY21. The company recorded operating profit of Rs 164.53 crore in Q3FY20 as against operating loss of Rs 9.88 crore in Q3FY21. Similarly, the company reported net profit of Rs 95.97 crore in Q3FY21 as compared to net loss of Rs 56.17 crore in Q3FY20. The revenue of fertilizer and industrial products segments saw an increase of 13.77 per cent and 49.29 per cent, respectively, in Q3FY21 as compared to Q3FY20. The company predicts demand for agriculture and fertilizer industry to be healthy in FY21 against the backdrop of a bumper Rabi harvest, larger summer crop area and expectation of better monsoon. Hence, we recommend BUY.
ORIENT CEMENT LIMITED
CMP - Rs 103.35
BSE CODE 535754
Volume 40,096
Face Value Rs 1
Target Rs 115
Stoploss Rs 93(CLS)
Orient Cement Limited is an Indianbased company engaged in manufacturing and sales of cement. The company is part of the CK Birla Group. The manufacturing facilities of the company are located at Devapur in Telangana, Jalgaon in Maharashtra and Chittapur in Karnataka. Looking at the standalone quarterly results, the net sales rose by 7.11 per cent from Rs 564.49 crore in Q3FY20 to Rs 604.61 crore in Q3FY21.The operating profit significantly jumped from Rs 57.62 crore in Q3FY20 to Rs 144.06 crore in Q3FY21. The company reported net profit of Rs 53.88 crore in Q3FY21 as compared to net loss of Rs 5.67 crore in Q3FY20. The sustainable financial performance can be a result of premiumisation strategies adopted by the company along with improved efficiencies, higher AFR usage, improved fuel mix and other effective cost control measures both for fixed and variable costs. Predicting a healthy performance of the company as well as cement sector we recommend BUY.
(Closing price as of March 23, 2021)