NSE Symbol: GNFC | BSE Code: 500670
GNFC Stock Trends-2017-2018:
In January 2017, on 6th January the GNFC stock price began with Rs248.45 which continued like that till the month end and closed at Rs248.80. The mid-quarter saw a rise in price at Rs266 around 6th of March and the first quarter ended at Rs 287.05. The second quarter started with a little slump at Rs269.30 which soared in May month when the share price reached Rs312.25 level but the second quarter ended at Rs268.25. The third quarter started with a good note at Rs 284.30 which saw a slight slump in August when the GNFC share price fell at Rs 272.40 but by the end of the third quarter, the stock price rose again at Rs 303.05. The fourth quarter again showed a great start when the scrip began at Rs369.70 and the stock price soared up to Rs429.45 in mid of October. The upward trend remained to continue and the fourth quarter ended at Rs 494.
2018 began with a slight slump when the share price fell at Rs 485 in January and continued in February with the share price at Rs433. The share price plummeted further in March at Rs 363.95 which soared again in the month of April when the share price became Rs476.53. In May the price soared again at Rs477.35 mark. The June month saw a slump again when the GNFC share price fell at Rs402.35. July gave a little hope when the price rose to Rs417.40 but in the August month, the stock price again plummeted toRs391.75 which continued in the month of September as well when the share price dropped at Rs349.45 level. In October the stock quote again dipped to Rs344 which may change again by the end of the quarter.
Recent Wealth Performance of GNFC in 2018:
As per the FY2018, 66% revenue of the company come from chemicals, 30% from fertilizers while other business verticals contribute rest 4% revenue. However, 98% of the EBIT comes from the substances itself. The domestic market share of the company is at 63%
Despite evidencing a temporary slump in January due to a seven-day shut-down of its Toluene di-isocyanate (TDI) plant at Dahej, GNFC reported a stellar set of fourth quarter FY18 numbers after which the stock has soared almost 7.5 percent in trade.
The performance was increased by a 34% year-on-year (YoY) growth in topline along with a 38% year-on-year expansion in the net profit. The EBITDA margins saw an inclination due to inventory gains and lower costs of power. The interest expenses reduced by 66% due to the significant debt repayment which improved operating profit significantly. On a QoQ basis, the company has reported a healthy 11% growth in topline, accompanied by 44% expansion in the net profit.
The EPS saw a 38% increase YoY. The management has declared a 75% dividend is totaling around Rs 150 crore.
The fourth quarter noticed a significant reduction in debt. The management delivered on its target of being debt free. The company has repaid the entire long-term debt and around 80 percent of its short-term borrowings, have come down to Rs 230 crore debt on its books. From Rs 1,700 crore, the GNFC has brought down its working capital utilization to around Rs 225 crore. It is expected to come down further, which would also bring down the finance costs. A substantial reduction is expected in the finance cost in the upcoming quarters which would provide significant traction to margins and earnings.
The stock has increased 15% in the last three months and has seen an inclination of 56% in the past 12 months. It is now trading at a trailing Profit/Earning multiple of 9 times and an EV/EBITDA of 5.3 times. As per the improving performance, healthier balance sheet quality and positive guidance from the management, traction in earnings is expected to continue which could lead to a further re-rating of the stock. The company has shifted from a massive debt profile to a debt-free balance sheet and will have a substantial amount of cash on its books going forward. Utilization and allocation of money would be a critical factor to watch out for as it would also define the future earnings trajectory.
Overview of GNFC:
Gujarat Narmada Valley Fertilizers & Chemicals Limited or GNFC is a joint sector entity promoted by the Government of Gujarat and the GSFC. It was incorporated in Bharuch, Gujarat in 1976. Headquartered at Bharuch in an extremely prosperous industrial belt, the GNFC sources the natural resources of the land as well as the abundant reserves of the area for industrial purpose.
GNFC commenced its manufacturing and marketing operations after the incorporation of one of the largest single-stream ammonia-urea fertilizer complexes of the world in 1982. Over the next few years, the GNFC successfully operated different projects - in chemicals, fertilizers, and electronics.
Since inception, the GNFC has worked towards an extensive growth as a corporation respecting the environment and springs from the progressive vision of GNFC.
GNFC today has diversified much beyond fertilizers through a process of horizontal integration. Chemicals/Petrochemicals, Energy Sector, Electronics/Telecommunications, and IT form ambitious and challenging additions to the corporate portfolio. The company has an active, strategic view towards expansion and diversification. In chemicals, the GNFC has been diversified into TDI, Methanol, Formic Acid, Nitric Acid, Ethyl Acetate, and Acetic Acid.
Shri MS.Dagur is the Managing Director of GNFC.
Should I invest in GNFC Stocks?
The EPS or Earnings Per Share on GNFC share price has been increased in 2017 from 2016, which was Rs33.50 crore in comparison to Rs11.11 crore but there was another exceptional income that was added to it. In 2018 the EPS has plummeted from Rs33.50 to Rs 29.63 crore. However, the capacity utilization of the company has moved up at 87%. In the FY17, the Profit After Tax was Rs 529 crores, and in FY18 it is Rs 460 crores plus the depreciation of Rs204 crores, however by the end of the year, the cash profits for the company will reach around Rs800-900 crores. So this year has shown phenomenal growth. The interest paid per quarter has been reduced since the third quarter of 2017. The company is also looking towards the growth of 'Neem Project' which had generated a revenue of Rs45 crore in the FY2017. The promoters of the company are looking to make it a debt-free company, and apart from the Gujarat government, there are many other big investors associated with it.
Also, GNFC has attracted many pension funds including the World Bank Pension Trust due to the consistent performance of the company which gives a positive sign for investing in it. As per the recent D&B's rankings GNFC has led among all the Gujarat govt owned companies. This year the company is ranked at 129th position, making a jump of 83 places, compared to 212th rank in last year. Of all these 17 chemical companies, GNFC is the third best chemical company in India.