Gujarat Narmada Valley Fertilizers & Chemicals Limited is India's industrial chemicals and fertilizer manufacturing major. The company has widespread operations in industrial chemicals, fertilizers and information technology segments. The company is engaged in production and sales of a range of fertilizers, including urea and ammonium nitrophosphate under the ambit of its brand Narmada.
On the financial front, GNFC posted a 4.62 per cent decline in its net sales from ₹1,377 crore in the fourth quarter of FY16 to ₹1,313.56 crore in the fourth quarter of the fiscal year 2017. The company’s operating profit stood at ₹124.89 crore in Q4FY17, down by 49.39 per cent on a year-on-year basis. However, the profit after tax of the company rose immensely and stood at ₹238.42 crore, up by 227.68 per cent in the fourth quarter of the financial year 2017 on a year-on-year basis.
On an annual basis, the company’s net sales increased by 8 per cent to ₹4,945 crore in the financial year 2017, as against net sales of ₹4,548 crore in the previous fiscal (2016). The company’s PBDT stood at ₹715 crore in FY17, up by 72 per cent from ₹415.64 crore in the previous fiscal. The company’s net profit increased by over 130 per cent, from net profit of
₹226.36 crore in FY16 to ₹521.30 crore in FY17. On the valuation front, the share price of GNFC is trading at a PE multiple of 8.94x, as against its peers such as Zuari Agro Chem's (81.54x), Gujarat State Fertilizers & Chemicals Limited
(12.76x). The company’s PE multiple is lower than the industry PE multiple of 19.17x, suggesting good scope of growth.
The normal monsoons and the implementation of direct benefit transfer scheme by the government will boost up farm investments made by farmers, thereby increasing the demand for fertilizers. GNFC is likely to benefit further from the proposed imposition of anti-dumping duty on TDI by the government, as the company is the sole manufacturer of TDI in India and has over 50 per cent of the total market share for TDI. The government is most likely to impose import restrictions on fertilizers. All these factors make GNFC a good stock to invest in.