GUJARAT NARMADA VALLEY FERTILIZERS & CHEMICALS LTD Result Update (PARENT BASIS): Q2 FY18

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1 GUJARAT NARMADA VALLEY FERTILIZERS & CHEMICALS LTD Result Update (PARENT BASIS): Q2 FY18 Index Details Stock Data Sector Fertilizers BSE Code Face Value wk. High / Low (Rs.) / Volume (2wk. Avg.) Market Cap (Rs. in mn.) Annual Estimated Results(A*: Actual / E*: Estimated) Years(Rs in mn) FY17A FY18E FY19E Net Sales EBITDA Net Profit EPS P/E Shareholding Pattern (%) As on Sep 2017 As on Jun 2017 Promoter Public Others Year Comparative Graph GNFC LTD S&P BSE SENSEX CMP: NOV 23 rd, 2017 Overweight SYNOPSIS ISIN: INE113A01013 Gujarat Narmada Valley Fertilizers and Chemicals Limited (GNFC) operate businesses mainly in the Industrial Chemicals, Fertilizers and Information Technology (IT) Products space. The company turnover stood at Rs mn for Q2 FY18 as against Rs mn in the corresponding quarter of the previous year, up by 3.08%. During the quarter, EBIDTA stood at Rs mn as against Rs mn in the corresponding period of the previous year. During the quarter ended Q2 FY18, PBT increased by 7.74% to Rs mn from Rs mn in the corresponding quarter ending of previous year. During the quarter, Net profit stood at Rs mn as against Rs mn in the corresponding quarter ending of previous year. EPS of the company stood at Rs a share during the quarter as against Rs in the corresponding quarter ending of previous year. During the quarter, EBIDTA and PAT margins stood at 22.76% and 11.02% respectively. During H1 FY18, Net sales stood at Rs mn as compared to Rs mn in H1 FY17, grew by 5.63%. During the half year ended 30 Sep, 2017, Net profit stood at Rs mn as against Rs mn in the half year ended 30 Sep, 2016, up by 7.66%. Net Sales of the company is expected to grow at a CAGR of 6% over 2016 to 2019E. PEER GROUPS CMP MARKET CAP EPS(TTM) P/E (X)(TTM) P/BV(X) DIVIDEND Company Name (Rs.) Rs. in mn. (Rs.) Ratio Ratio (%) GNFC Ltd GSFC Ltd RCF Ltd Coromandel International Ltd

2 QUARTERLY HIGHLIGHTS (PARENT BASIS) Results updates- Q2 FY18, (Rs in mn) Sep-17 Sep-16 % Change Revenue % Net Profit % EPS % EBIDTA % The company turnover stood at Rs million for the 2 nd quarter of the FY as against Rs millions in the corresponding quarter of the previous year. During the quarter, Net profit stood at Rs million as against Rs million in the corresponding quarter ending of previous year. Reported earnings per share of the company stood at Rs a share during the quarter as against Rs in the corresponding quarter ending of previous year. Profit before interest, depreciation and tax stood at Rs million as against Rs million in the corresponding period of the previous year. Break up of Expenditure Break up of Expenditure Q2 FY18 Q2 FY17 % CHNG Cost of Material consumed Purchase of Traded Goods Power, fuel and other utilities Employees Benefit Expenses % % % % Excise duty % Depreciation and amortization expenses % Other Expenditure %

3 Segment Revenue COMPANY PROFILE Gujarat Narmada Valley Fertilizers and Chemicals Limited (GNFC) operate businesses mainly in the Industrial Chemicals, Fertilizers and Information Technology (IT) Products space. Serving a diverse set of customers, the Company is now an established leader in most of its chosen lines of business. GNFC today is one of the leaders in fertilizer industry. The Company is engaged in manufacturing and selling fertilizers such as Urea and Ammonium Nitrophosphate under the brand name of NARMADA. The Company has set up core chemical and petrochemical plants such as Methanol, Formic Acid, Nitric Acid, Acetic Acid, Toluene Di - Isocyanate, Aniline, Ammonium Nitrate, Ethyl Acetate, Methyl Formate etc. The Company is one of the largest producers of Formic Acid and Acetic Acid in the country. The Company has India s largest single stream plant of Aniline. The company is the only manufacturer of Toluene Di-Isocynate in South East Asia and Indian Sub Continent. The Company s chemicals enjoy high brand value in niche market. The Company provides several cutting-edge IT services and solutions covering Digital Signatures Certificate (DSC), E- procurement, E-Governance projects, Data centres and CCTV surveillance systems etc. under Brand name of (n)code solutions.

4 FINANCIAL HIGHLIGHT (PARENT BASIS) (A*- Actual, E* -Estimations & Rs. In Millions) Balance Sheet as of March 31, E FY16A FY17A FY18E FY19E ASSETS 1) Non-Current Assets a) Property, plant and equipment b) Capital Work in Progress c) Investment property d) Intangible assets e) Financial assets i) Investments ii) Loans iii) Other financial assets f) Other non-current assets Sub - Total Non- Current assets ) Current Assets a) Inventories b) Financial assets i) Trade receivables ii) Cash and bank equivalents iii) Bank balances iv) Loans v) Other financial assets c) Other current assets Sub - Total current assets Total Assets (1+2) EQUITY AND LIABILITIES 1) EQUITY a) Equity Share Capital b) Other equity Total Equity ) Non Current Liabilities a) Financial liabilities i) Borrowings b) Long term provisions c) Deferred tax liabilities (Net) d) government grants Sub - Total Non Current liabilities ) Current Liabilities a) Financial liabilities i) Borrowings ii) Trade payables iii)other financial liabilities b) Other Liabilities c) Short term Provisions d)government Grants e) Current tax liabilities Sub - Total current liabilities Total Equity and Liabilities (1+2+3)

5 Annual Profit & Loss Statement for the period of 2016 to 2019E Value(Rs.in.mn) FY16A FY17A FY18E FY19E Description 12m 12m 12m 12m Net Sales Other Income Total Income Expenditure Operating Profit Interest Gross profit Depreciation Exceptional items Profit Before Tax Tax Net Profit Equity capital Reserves Face value EPS Quarterly Profit & Loss Statement for the period of 31 st Mar, 2017 to 31 st Dec, 2017E Value(Rs.in.mn) 31-Mar Jun Sep Dec-17E Description 3m 3m 3m 3m Net sales Other income Total Income Expenditure Operating profit Interest Gross profit Depreciation Exceptional items Profit Before Tax Tax Net Profit Equity capital Face value EPS

6 Ratio Analysis Particulars FY16A FY17A FY18E FY19E EPS (Rs.) EBITDA Margin (%) 16.82% 17.75% 16.94% 16.96% PBT Margin (%) 5.52% 14.46% 10.03% 10.23% PAT Margin (%) 3.56% 10.54% 6.64% 6.84% P/E Ratio (x) ROE (%) 5.27% 13.71% 8.56% 8.77% ROCE (%) 18.58% 19.99% 23.06% 24.39% Debt Equity Ratio EV/EBITDA (x) Book Value (Rs.) P/BV Charts

7 OUTLOOK AND CONCLUSION At the current market price of Rs , the stock P/E ratio is at x FY18E and x FY19E respectively. Earning per share (EPS) of the company for the earnings for FY18E and FY19E is seen at Rs and Rs respectively. Net Sales of the company is expected to grow at a CAGR of 6% over 2016 to 2019E On the basis of EV/EBITDA, the stock trades at 8.54 x for FY18E and 7.65 x for FY19E. Price to Book Value of the stock is expected to be at 1.66 x and 1.51 x for FY18E and FY19E respectively. Hence, we say that, we are Overweight in this particular scrip for Medium to Long term investment. INDUSTRY OVERVIEW Due to importance of fertilizer for sustained agricultural growth and in attaining self sufficiency in foodgrain for the country, Fertilizer Industry is one of the priority and regulated sector. Fertilizer Industry is characterized by high dependence on Government policies with respect to subsidy and control. Historically, fertilizer sector has not been able to attract new investment due to regulated return on Investment through subsidy and price control. Further, the industry's other woes are mounting subsidy bills and lack of clarity in policies particularly with respect to allocation of feedstock. The Chemical industry is one of the most diversified and growing industrial sector of the country covering thousands of commercial products. Imports of various chemicals are on a rise, as increased/enhanced capacities are not able to cope up with the increasing demand. This Industry occupies a pivotal position in meeting basic needs and improving quality of life. The Indian chemical sector accounts for 9-10% of total exports and 8-9 % of total imports of India. Currently, per capita consumption of products of the Indian chemical industry is one-tenth of the world average, which reflects the huge potential for growth.

8 Recent Developments: The Union Cabinet gave its approval to a comprehensive New Urea Policy 2015 for the next four financial years. The Policy has multiple objectives of maximizing indigenous urea production, promoting energy efficiency in urea units, to ensure availability of urea to farmers with lesser subsidy burden on the Government. As per Government of India (GOI) notification, it has been made mandatory to coat 100% of urea production in the country with neem oil. The use of Neem Coated Urea helps in improving the efficiency of the nutrients, in curtailing diversion of urea for industrial uses and acts as a pesticide. Government has approved Natural Gas pooling policy under which all urea units would get gas at a uniform price. This is to ensure level playing fields to all urea units. Government has set up Integrated Petroleum, Chemicals and Petrochemicals Investment Regions to promote manufacturing of Chemicals and Petrochemicals in the country.. Outlook The agriculture sector in India is expected to generate better momentum in the next few years due to increased investments in agricultural infrastructure such as irrigation facilities, warehousing and cold storage. Factors such as reduced transaction costs and time, improved port gate management and better fiscal incentives would contribute to the sector s growth. Furthermore, the growing use of genetically modified crops will likely improve the yield for Indian farmers.

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