Reviews

In this edition, we have reviewed Gujarat Alkalies and Chemicals Ltd. and City Union Bank. We suggest our reader-investors to HOLD in Gujarat Alkalies and Chemicals Ltd. and City Union Bank

We had recommended Gujarat Alkalies in volume 33, issue no. 24, dated Oct 29-Nov11, 2018, under the Cover Story. The stock was trading at Rs. 563 then and was recommended owing to good financial performance, operational efficiency and competitive edge of the company.

Gujarat Alkalies & Chemicals is engaged in the business of manufacturing basic chemicals such as sodium cyanide, sodium ferrocyanide, chloromethanes, hydrochloric acid, caustic potash, potassium carbonate, phosphoric acid and hydrogen peroxide. The company exports its products to the US, Europe, Australia, Africa, Far & Middle East countries, China and South-Asian markets

On the financial front, the net sales reported by the company in Q3FY18 was Rs. 816.26 crore, up by 32.16 per cent as compared to Rs. 617.61 crore posted in Q3FY18. The PBIDT for Q3FY19 grew by 54.26 per cent to Rs. 276.12 crore as against Rs. 179 crore posted in Q3FY18. The company reported 44 per cent higher PAT in Q3FY19 at Rs. 162.28 crore versus Rs. 112.21 crore in Q3FY18.

On the annual front the company posted its topline at Rs. 2,454.50 crore in FY18 as against Rs. 2070.21 crore in the previous fiscal, thus exhibiting a 20 per cent growth. The PBIDT grew 77 per cent to Rs. 892.44 crore in FY18 versus Rs. 505.54 crore in FY17. The PAT also significantly grew by 74 per cent in FY18 at Rs. 535.02 crore against Rs. 308.1 crore in FY17.

We recommend a HOLD as we believe the stock would gain significant traction on the bourses in the coming quarters.



We had recommended City Union Bank in volume 34, issue no. 2, dated Dec 24, 2018-6 Jan 2019 under the Cover Story. The stock was trading at Rs. 178.45 then and was recommended due to diversified asset profile, higher yielding loan portfolio and track record of profitability and dividend payout.

City Union Bank operates in the areas of personal banking. The bank offers a range of services and products in areas like remittance, saving, deposit, loans and payment to their NRI customers. Under corporate banking, the bank offers services like CMS, e-tax, trade finance, insurance products and loans to their corporate clients. The overseas offices of the banks are located in Hong Kong, Sydney, Abu Dhabi, Beijing, Shanghai and London.

On the financial front, the interest earned by the bank was Rs. 8,477.53 crore, up by 2.63 per cent in Q3FY19, as against Rs. 8,260.47 crore posted in Q3FY18. The operating profit stood at Rs. 1,750.37 crore, up by 5.79 per cent from Rs. 1,654.6 crore reported in Q3FY18. The PAT was reported at Rs. 153.21 crore in Q3FY19 as compared to a loss of Rs. 1,249.85 crore posted in Q3FY18.

On the annual front, the interest earned by the bank in FY18 was Rs. 32,748 crore, up from Rs. 32,659.98 crore in FY17. The operating profit in FY18 was Rs. 7,539.58 crore as compared to Rs. 7,430.01 crore in FY17. The bank posted a net loss of Rs. 5,247.37 crore in FY18 as compared to a net profit of Rs. 555.21 crore in FY17.

Since our recommendation, the price of the stock has gained 12 per cent, but we would recommend a HOLD for the moment as we believe that the company has a positive outlook in the coming quarters.

(Closing price as of Apr 09, 2019)