Inox Wind IPO Set to Un­lock Value for Gu­jarat Flu­o­rochem

The Economic Times - - Markets & Finance -

farm and posted .` 26 crore of net profit from rev­enues of .` 155 crore for the 9-month pe­riod ended De­cem­ber 2014. It is an an­nu­ity busi­ness with high cash flows that is suf­fi­cient to ser­vice the debt.

Go­ing by the sum of parts val­u­a­tion method­ol­ogy, Gu­jarat Flu­o­ro­chem­i­cals’ listed en­ti­ties con­trib­ute nearly .` 6,400 crore to its value. The chem­i­cal busi­ness is en­joy­ing EBIDTA mar­gins of 26% cur­rently and the man­age­ment has given a guid­ance of 30% EBITDA mar­gins as ca­pac­ity utilisation im­proves at the PTFE plant by De­cem­ber 2015. Vi­nati Or­gan­ics, a chem­i­cal com­pany with sim­i­lar high mar­gins, en­joys mar­ket val­u­a­tion 27-28 times its an­nu­alised prof­its. Con­sid­er­ing GFL’s high re­turn on cap­i­tal em­ployed (RoCE), cash gen­er­a­tion and growth visibility, the chem­i­cal busi­ness can be val­ued at 28-30 times its an­nual earn­ings. The stand­alone val­u­a­tion of the chem­i­cals busi­ness should be of around .` 3,300 crore.

The wind farm busi­ness, a prof­itable cash-gen­er­at­ing busi­ness, has slow growth, but high RoCE. This en­tity can be val­ued 15 times its an­nu­alised prof­its or around .` 600 crore.

Newspapers in English

Newspapers from India

© PressReader. All rights reserved.