BASF India spurts on strong volumes on rating upgrade

Last Updated: Fri, Oct 06, 2017 14:10 hrs
A man looks at a screen across the road displaying the Sensex on the facade of the Bombay Stock Exchange building in Mumbai

Mumbai: This is turning out to be a great session for stocks in the chemicals space today, with many of these surging higher on sustained buying interest.

BASF India, among the big gainers in the chemicals space today, has rallied on reports that leading brokerage Emkay Global has initiated coverage on the stock with a 'Buy' rating, backed by a ramp-up in its new capacity utilisation, consolidation of niche business, and settlement of technical issues.

BASF India rallied to Rs 1765 on BSE (Rs 1763.20 on the National Stock Exchange) earlier in the session, and is currently at Rs 1745, up 18.8% from previous closing price. The stock's 52-week high was 1812.40 (recorded on 30 June 2017). It had touched a low of Rs 990 on 21 November 2016. On BSE, its low was Rs 988.50.

On BSE, the BASF India counter has clocked a volume of nearly 80,000 shares so far in the session, as against average daily volume of around 1830 shares. On the National Stock Exchange, the counter has clocked a volume of more than 4.66 lakh shares so far today.

Emkay Global expects BASF India Limited's revenue and profitability to rise significantly over the next three years on product launches and localisation of products.

It is of the view that the company's plant at Dahej will spur revenue growth thanks to substantial capital expenditure on it and its development into a chemical complex to reduce imports of intermediate products.

Also, with the company's agrochemicals segment set to undergo transformation due to as many as 13 product launches and the localisation of products in several segments likely to boost high margin manufacturing revenue, the dependence on low margin trading business is likely to come down, the brokerage says in its report.

The brokerage says in its note that in financial year 2020, BASF India may well record a net profit of about Rs 400 crore, improving leaps and bounds in performance, compared to its show in financial year 2016-17, when it posted a net loss of Rs 14.1 crore.

Return on capital employed is expected to rise to more than 20% in 2020, up sharply from 4% return in financial year 2017. The brokerage expects revenue and EBITDA to grow at CAGR of 14% and 39% respectively over FY 2017-2020, led by settlement of technical issues and enhanced capacity utilization.

In the first quarter ended June 2017, BASF India posted a net profit of Rs 0.68 crore, down as much as 93.07% compared to the year-ago quarter. Net sales increased 8.43% to Rs 1507.17 crore in the first quarter, compared to the same quarter last financial year.

Among other stocks in the chemicals space, India Glycols is up 16%, Ganesh Benzo is gaining 16%, Transpeck is adding 8.5% and Tyche Industries is up 7.5%.

Grauer and Weil, Mysore Petro, Gujarat Alkalies, Andhra Petro, Haryana Leather, Tuticorin Alkali & Chemicals, Kesar Petro, Punjab Alkalies, Shree Phuskhar, Shree Rayalaseema, Indo Amines, Bhagawati Oxygen, IG Petro and Kanoria Chemicals are also up with impressive gains.

More from Sify: