1
Please refer to important disclosures at the end of this report
1
1
Chambal Fertilisers and Chemicals Limited (CHMB) offers urea and di-
ammonium Phosphate (DAP). The Company's segments include Fertilisers and
other Agri-inputs segment. Two years ago, CHMB guided for increasing its focus
on core agri-inputs and selling its non-core businesses. It sold the textile division,
part of the IT segment, and has entered into an agreement to sell the shipping
business. The leaner entity will have core RoCE of ~11% in FY19E vs. 5% in
FY15. CHMB is installing a new urea facility of 1.3mTPA (capex ~USD 0.9bn,
on-stream in FY20). Chambal’s outstanding subsidy declined from `2130Cr at
FY17-end to `1430Cr at end-Q1FY18 a reduction of ~`700Cr. The release in
subsidy had an almost immediate and proportionate impact on the company’s
working capital debt, which reduced from `3010Cr at FY17-end to `2300Cr at
end-Q1FY18. Gadepan-3 plant achieved 67% completion by 25
th
Jul’17, which
provides comfort with respect to its timely execution. The company has spent
more than `2200Cr on the project (as at end-Q1FY18) with mainly the
construction work left to be done (engineering and procurement largely
completed). Chambal has already tied-up gas supply of 2.2mmscmd (with GAIL
and IOC) for the plant and has made arrangements to ensure water availability
during the non-rainy period (Oct-Jun). Q1FY18 Lower farmgate prices, a drop in
channel inventory and a normal monsoon will support volumes in FY18. In the
long term, better farm income and improved irrigation facilities will drive growth.
CHMB has a RoCE 12.46% and is trading at a valuation P/E of 16.75x of FY17
earnings. Hence BUY.
BUY
CMP `141
1.2
Reuters Code
CHMB.NS
CHMB:IN
10
BSE Sensex
31,196
Nifty
9,722
Face Value (`)
Fertilisers
Market Cap (` cr)
5,889
52 Week High / Low
146.25/53.7
Avg. Daily Volume
131,731
Vaibhav Agrawal
022 3935 7800 Ext: 6808
[email protected]gelbroking.com
Chambal Fertilisers & Chemicals Ltd
Others | Fertiliser
August 21, 2017
2
Chambal Fertilisers & Chemicals Ltd |Fertiliser
June 5, 2017
2
Research Team Tel: 022 - 39357800 E-mail: [email protected] Website: www.angelbroking.com
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Disclosure of Interest Statement Chambal Fertiliser
1. Financial interest of research analyst or Angel or his Associate or his relative No
2. Ownership of 1% or more of the stock by research analyst or Angel or associates or relatives No
3. Served as an officer, director or employee of the company covered under Research No
4. Broking relationship with company covered under Research No
Ratings (Based on expected returns Buy (> 15%) Accumulate (5% to 15%) Neutral (-5 to 5%)
over 12 months investment period): Reduce (-5% to -15%) Sell (< -15)