Fertilizers shares in focus; GNFC hits new high

GNFC, GSFC, Nagarjuna Fertilizers, Zuari Agro Chemicals, RCF and SPIC were up more than 2% on BSE

Shares of fertilizers companies rallied by up to 11% on BSE in intra-day trade on back of heavy volumes.

Gujarat Narmada Valley Fertilizers & Chemicals (GNFC), Gujarat State Fertilizers & Chemicals (GSFC), Nagarjuna Fertilizers and Chemicals, Zuari Agro Chemicals, Rashtriya Chemicals & Fertilizers (RCF) and Southern Petrochemicals (SPIC) were up more than 2% on BSE. On comparison, the benchmark S&P BSE Sensex was up 0.40% at 31,622 points at 10:54 AM.

GNFC hit a record high of Rs 359, up 11% in intra-day trade, extending Tuesday’s 7% rally on the BSE. The trading volumes on the counter jumped more than four-fold with a combined 5.79 million shares changed hands on the BSE and NSE so far.

The rating agency CRISIL last week assigned its ‘CRISIL A+’ rating to the commercial paper programme of GNFC.

In the industrial chemicals segment, GNFC primarily produces toluene di-isocyanate (TDI), aniline, ammonium nitrate, formic acid, acetic acid, and nitric acid, and has a healthy market position. It also enjoys market leadership position in TDI chemical, as the sole producer in India and South East Asia.

“Reduction of debt of Rs 1,100 crore in fiscal 2017, backed by realization of subsidy receivables and scheduled repayments, has significantly strengthened capital structure: gearing reduced to 0.51 times as on March 31, 2017, from 1.16 times a year earlier. Debt protection metrics have improved too; interest coverage and net cash accrual to total debt ratios improved to 3.4 and 0.35 time, respectively, in fiscal 2017 from 2.5 times and 0.1 time, respectively, the previous fiscal,” CRISIL said in statement.

CARE Ratings believes there will be a further growth trajectory of the financials of the fertilizer manufacturing companies as the polices introduced to aid the fertilizer sector are playing in favour.

When we observed the Q1 financials of 17 fertilizer companies there has been a 13% jump in the net profit margins of these companies on a q-o-q basis, the rating agency said in fertilizers sector update for Q1-FY18.

CARE Ratings believes that the production of fertilizers will be increase in the coming quarters especially during the Q3FY18 when it will be the sowing season for the Rabi crops.

COMPANY	LATEST	PREV CLOSE	GAIN(%)
G N F C	351.60	324.25	8.43
G S F C	134.45	127.75	5.24
BASANT AGRO TECH	6.70	6.45	3.88
SHIVA GLOBAL	72.50	69.90	3.72
NAGARJUNA FERT.	16.00	15.50	3.23
S P I C	35.55	34.65	2.60
ZUARI AGRO CHEM.	470.00	458.40	2.53
R C F	89.65	87.45	2.52