Company Report | Q4 FY11 Result Update

LONG TERM INVESTMENT CALL

17 May 2011 ACCUMULATE

Industry Fertilisers On strong growth trajectory

CMP (INR) 172 Deepak Fertilisers & Petrochemicals Ltd. (DFPC) posted Q4 FY11
Target (INR) 202 result broadly in line with Unicon estimates. Total income rose by
Upside / Downside (%) 17 ~33% to INR 4,402mn in the quarter.
52 week High/Low (INR) 212/ 102
Market Cap (INR MN) 15,230
Chemical segment (manufactured) registered a revenue growth of 37%
3M Avg. Daily Volumes 160,820
YoY to INR 3.5bn on healthy volumes in TAN, nitric acid, methanol,
P/E (FY12E) 6.1
IPA and propane. Average realisation rose by ~9% during the quarter.
Shareholding Pattern (%) However, margin from chemical segment contracted due to higher cost
of ammonia for the new TAN facility.

Manufactured fertiliser segment showed a revenue growth of 40% YoY

as compared to 4% YoY growth in traded fertiliser segment. Fertiliser
realisation grew by 37% in the quarter. Margin for this segment
improved to 0.7% compared to -2% last year.

EBITDA increased by 16.5% YoY to INR 935mn while EBITDA margin

contracted by 295bps to 21.8%. Higher input cost affected the margins
Stock Performance of the company.

225
Net profit increased by 19.4% to INR 527mn in the quarter. Net profit
200 margin dropped from 13.3% to 12% over the same period. Tax
provision increased 35% in the quarter to INR 208mn.
175

150 Outlook & Valuation

125 Lack of competition, switching of major mining & infrastructure
players to technical grade AN (from fertiliser grade AN) and strong
100
y n l g p ct v ce n b r r y growth in infrastructure in Southeast Asia (especially India in 12th
a Ju Ju u e
S O
o
D Ja e
F
a p
A
a
M A N M M
Five Year Plan) would support TAN growth. The management expects
DFPC NIFTY
its new TAN facility to achieve a utilisation level of 70% in FY12.
Performance (%)
1M 3M 12M Better utilisation of ANP unit and revision of fertiliser prices under
DFPC -0.3 1.3 54.2 NBS provide strong revenue visibility for the fertiliser segment.
NIFTY -5.6 0.3 5.9 Estimates of better monsoon this season have further lit up the sector
* Source: ACE Equity prospects. The govt. expects 4% increase in fertiliser consumption this
(INR Mn) year. Contribution from bentonite sulphur is expected to rise stably till
Particulars Actual Estimates FY13.
Total Income 4,402 4,345
Stock is trading at 6.1x its FY12E earnings. We downgrade the stock to
EBIDTA 935 1,104
ACCUMULATE with a price target of INR 202.
Reported PAT 527 530
* Source: ACE Equity, Unicon Research

Wealth Research, Unicon Financial Intermediaries. Pvt Ltd.

Email: wealthresearch@unicon.in
Financials
(INR Mn)
Standalone Results Consolidated Results
Q4 FY11 Q4 FY10 Y-o-Y Q3 FY11 Q-o-Q FY11 FY10 Y-o-Y
Net Revenue 4,266 3,193 33.6 3,703 15.2 16,131 13,120 23.0
Other Operating income 19 46 -58.2 47 -59.4 148 173 NA
Net revenue & Other op inc. 4,285 3,238 32.3 3,750 14.2 16,279 13,293 22.5
Other income 118 79 49.7 82 43.4 335 356 -6.0
Total Income 4,402 3,317 32.7 3,832 14.9 16,614 13,649 21.7
Operating Exp. 3,349 2,436 37.5 2,931 14.3 12,686 10,373 22.3
EBITDA 935 803 16.5 819 14.2 3,593 2,920 23.0
EBITDA (%) 21.8 24.8 -295 bps 21.8 bps 22.1 22.0 10 bps
Depreciation 194 163 18.9 184 5.6 787 714 10.3
EBIT 859 718 19.6 717 19.8 3,141 2,563 22.6
EBIT (%) 19.5 21.6 -213 bps 18.7 80 bps 18.9 18.8 13 bps
Financial charges 124 119 3.7 114 8.7 439 464 -5.3
PBT 736 599 22.8 604 21.9 2,701 2,099 28.7
Tax Provision 208 154 35.4 167 24.7 792 697 13.7
Tax Rate (%) 28.3 25.7 264 bps 27.7 63 bps 29.3 33.2 -386 bps
PAT 527 445 18.5 436 20.8 1,909 1,402 36.2
Adjt. for Exceptional Items 0 -3 NA -34 NA -34 250 -113.5
Reported PAT 527 442 19.4 403 30.9 1,875 1,653 13.5
Reported PAT (%) 12.0 13.3 -134 bps 10.5 147 bps 11.3 12.1 -82 bps
EPS 6.0 5.0 19.4 4.6 31.1 21.3 18.7 13.4
Source: Company

Wealth Research, Unicon Financial Intermediaries. Pvt Ltd.

Email: wealthresearch@unicon.in
 Unicon Investment Ranking Methodology

Rating Buy Accumulate Hold Reduce Sell

Return Range >= 20% 10% to 20% -10% to 10% -10% to -20% <= -20%

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Wealth Research, Unicon Financial Intermediaries. Pvt Ltd.

Email: wealthresearch@unicon.in