PEER GROUPS CMP MARKET CAP EPS P/E (X) P/BV(X) DIVIDEND Company Name (Rs.) Rs. in mn. (Rs.) Ratio Ratio (%)

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1 BUY CMP Target Price RASHTRIYA CHEMICALS & FERTILIZERS LTD Result Update (PARENT BASIS): Q4 FY15 JULY 6 th 2015 ISIN: INE027A01015 Index Details Stock Data Sector Fertilizers BSE Code Face Value wk. High / Low (Rs.) 74.75/48.35 Volume (2wk. Avg. Q.) Market Cap (Rs. in mn.) Annual Estimated Results (A*: Actual / E*: Estimated) YEARS FY15A FY16E FY17E Net Sales EBITDA Net Profit EPS P/E Shareholding Pattern (%) 1 Year Comparative Graph RASHTRIYA CHEMICALS & FERTILIZERS LTD BSE SENSEX SYNOPSIS Rashtriya Chemicals and Fertilizers Ltd (RCF), a Government of India Undertaking is a leading fertilizer and chemical manufacturing company with about 80% of its equity held by the Government of India. The company s net sales registered 5.41% increase and stood at Rs million compared to Rs million over the corresponding quarter of previous year. In Q4 FY15, Net profit stood to Rs million against Rs million in the corresponding quarter of previous year. During the quarter, operating profit is Rs million as against Rs million in the corresponding period of the previous year. The Company has recommended Final Dividend at Rs per shares of Rs. 10 each (i.e. 18%) for the year Net profit grew by 29% to Rs million for the end of FY15 from Rs million for the end of FY14. For the end of FY15, the company registered a growth of 17% in Net sales to Rs million from Rs million for the end of FY14. Net Sales and PAT of the company are expected to grow at a CAGR of 8% and 6% over 2014 to 2017E respectively. PEER GROUPS CMP MARKET CAP EPS P/E (X) P/BV(X) DIVIDEND Company Name (Rs.) Rs. in mn. (Rs.) Ratio Ratio (%) Rashtriya Chemicals & Fertilizers Ltd National Fertilizers Ltd Bharat Agri Fert & Realty Ltd Gujarat State Fertilizers & Chemicals Ltd

2 QUARTERLY HIGHLIGHTS (PARENT BASIS) Results updates- Q4 FY15, Rs. In million Mar-15 Mar-14 % Change Net Sales PAT (56.54) EPS (56.54) EBITDA (25.18) The company has achieved a turnover of Rs million for the 4 th quarter of the financial year 2015 as against Rs million in the corresponding quarter of the previous year. EBITDA stood at Rs million in Q4 FY15 against Rs million in the corresponding period of last year. In Q4 FY15, net profit of Rs million against Rs million in the corresponding quarter of the previous year. The company has reported an EPS of Rs for the 4 th quarter as against an EPS of Rs in the corresponding quarter of the previous year. Break up of Expenditure Break up of Expenditure (Rs in millions) Q4 FY15 Q4 FY14 % Chng Cost of Materials consumed % Purchase of traded goods % Employee benefit exp % Power and Fuel % Freight and Handling charge % Dep and amortization exp % Other expenses %

3 Segment Revenue COMPANY PROFILE Rashtriya Chemicals and Fertilizers Limited (RCF) a Government of India Undertaking is a leading fertilizer and chemical manufacturing company with about 80% of its equity held by the Government of India. It has two operating units, one at Trombay in Mumbai and the other at Thal, Raigad district, about 100 KM from Mumbai. Government of India has accorded "Mini-Ratna" status to RCF. RCF is one of the earliest units set up in the country with a vision of growth in fertilizer production for food security. It manufactures Urea, Complex Fertilizers, Bio-fertilizers, Micro-nutrients, 100 per cent water soluble fertilizers, soil conditioners and a wide range of Industrial Chemicals. It produces 23 lac MT Urea, 6.5 lac MT Complex fertilizers and 1.6 lac MT of Industrial Chemicals every year. The company is a household name in rural India with brands "Ujjwala" (urea) and "Suphala"(complex fertilizers) which carry high brand equity. RCF has countrywide marketing network in all major states. Apart from the own manufactured products, the Company is also engaged in marketing of SSP and imported fertilizer inputs like, DAP, MOP & NPK fertilizers. Besides fertilizer products, RCF also produces almost twenty industrial chemicals that are important for the manufacture of dyes, solvents, leather, pharmaceuticals and a host of other industrial products. Chemicals essential for every industry from food and drugs to Synthetic fibres, from textiles and cement to pesticides and paints; from explosives to specialty solvents and dye stock are produced by RCF. RCF also pioneered the manufacture of basic chemicals such a Methanol, Ammonia, Ammonium Nitrate, Sodium Nitrate, Sodium Nitrite, Ammonium Bicarbonate, Methylamines, Dimethyl Formamide and Dimethyl acetamide, Formic Acid, Argon in India. Today RCF is the only manufacturer of Dimethyl Formamide in India. As part of modernization, RCF has recently modernized its Ammonia I, Nitric Acid, Methanol and ANP plants. This has facilitated plants to sustain operations and meet technological challenges of improved efficiency, lower energy consumption and maintain environmental norms. It has also resulted in company achieving the highest standards of safety and product quality.

4 FINANCIAL HIGHLIGHT (PARENT BASIS) (A*- Actual, E* -Estimations & Rs. In Millions) Balance Sheet as at March 31, E FY14A FY15A FY16E FY17E I. EQUITY AND LIABILITIES: A. Shareholders Funds a) Share Capital b) Reserves and Surplus Sub-Total-Net worth B. Non-Current Liabilities: a) Long-term borrowings b) Deferred Tax Liabilities [Net] c) Other Long Term Liabilities d) Long Term Provisions Sub-Total-Long term liabilities C. Current Liabilities: a) Short-term borrowings b) Trade Payables c) Other Current Liabilities d) Short Term Provisions Sub-Total-Current Liabilities TOTAL-EQUITY AND LIABILITIES (A+B+C) II. ASSETS: D. Non-Current Assets: a) Fixed Assets b) Non Current Investments c) Long Term Loans and Advances d) Other non-current assets Sub-Total-Non-Current Assets E. Current Assets: a) Inventories b) Trade Receivables c) Cash and Bank Balances d) Short Term Loans and Advances e) Other Current Assets Sub-Total-Current Assets TOTAL-ASSETS (D+E)

5 Annual Profit & Loss Statement for the period of 2014 to 2017E Value(Rs.in.mn) FY14A FY15A FY16E FY17E Description 12m 12m 12m 12m Net Sales Other Income Total Income Expenditure Operating Profit Interest Gross profit Depreciation Profit Before Tax Tax Net Profit Equity capital Reserves Face value EPS Quarterly Profit & Loss Statement for the period of 30 Sep, 2014 to 30 Jun, 2015E Value(Rs.in.mn) 30-Sep Dec Mar Jun-15E Description 3m 3m 3m 3m Net sales Other income Total Income Expenditure Operating profit Interest Gross profit Depreciation Profit Before Tax Tax Net Profit Equity capital Face value EPS

6 Ratio Analysis Particulars FY14A FY15A FY16E FY17E EPS (Rs.) EBITDA Margin (%) PBT Margin (%) PAT Margin (%) P/E Ratio (x) ROE (%) ROCE (%) 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 9.63 x FY16E and 8.91 x FY17E respectively. Earning per share (EPS) of the company for the earnings for FY16E and FY17E is seen at Rs.6.06 and Rs.6.55 respectively. Net Sales and PAT of the company are expected to grow at a CAGR of 8% and 6% over 2014 to 2017E respectively. On the basis of EV/EBITDA, the stock trades at 5.32 x for FY16E and 5.03 x for FY17E. Price to Book Value of the stock is expected to be at 1.06 x and 0.95 x for FY16E and FY17E respectively. We expect that the company surplus scenario is likely to continue for the next three years, will keep its growth story in the coming quarters also. We recommend BUY in this particular scrip with a target price of Rs for Medium to Long term investment. INDUSTRY OVERVIEW FY15 was a reasonably good year for the fertiliser industry with overall volumes rising by 6% - in line with estimates of a 5-7% growth driven by the healthy sales of P&K fertilisers. While urea volumes grew only marginally by 1%, P&K volumes posted a robust 13% growth. The secular growth was primarily driven by low base effect of FY14 and was seen despite a drought during Kharif 2014 and unseasonal rains in Rabi Monsoon is predicted to be deficient during FY15, although it has started off relatively well. Growth outlook for the industry, therefore, appears more cautious for FY16: volume growth would depend largely on the regional distribution of rainfall. While urea sales will not be significantly impacted, the P&K segment is more vulnerable to monsoon and economic forces (rupee fluctuation, prices of key raw materials, etc.). The P&K segment is also facing increasing cost pressures as prices of key raw materials are on the rise. Currency depreciation would further compound the problem. P&K volumes should still remain stable if the distribution of rainfall is even. If monsoon is normal instead of deficient, sales volumes may witness a 2-3% increase, while volumes may decline if rainfall is unevenly distributed. Urea demand is expected to post a minor 1-2% growth to ~ MMT. The implementation of the NUP-2015 from Q2 FY16 makes the profitability for individual units dependent primarily on their energy efficiency. While the current subsidy policy is based on classification of urea units into six groups based on their feedstock and technological vintage, NUP-2015 reorganises the various units into three groups based on their energy efficiency levels. The subsidy savings that the units have been generating currently has been reduced as the normative energy efficiency on the basis of which subsidy is calculated has been reduced. While positive for the GoI as it would reduce subsidy outgo, it is marginally negative for the urea industry as they will not be able to get the same quantum of energy savings as they were getting in the past. Most of the companies in the urea space have been able to improve their energy consumption levels in the past few

8 years through energy savings and / or replacement of machinery under debottlenecking projects. These units may be able to generate healthy energy savings under the NUP-2015 as well despite tightening of the norms. Outlook The recent measures taken by the GoI are broadly positive for the industry, particularly the gas pooling policy, which will level costs for urea units, incentivises higher urea production from efficient units and provide visibility on gas availability for future projects. Nevertheless, these policies may not lead to an immediate improvement in financial performance of the fertiliser industry. The performance of the fertiliser industry in the near term would largely depend on how monsoon pans out during the Kharif season. The industry would however benefit from moderate international fertiliser environment with subdued energy price environment likely to drive cost of production lower for urea, although volatile currency and volatile prices of imported raw material for P&K fertilisers remains a concern. Besides, subsidy delays are expected to continue in Also, the issue of gas availability for P&K manufacturers remains and it remains to be seen how the GoI resolves the issue going forward. Disclaimer: This document is prepared by our research analysts and it does not constitute an offer or solicitation for the purchase or sale of any financial instrument or as an official confirmation of any transaction. The information contained herein is from publicly available data or other sources believed to be reliable but we do not represent that it is accurate or complete and it should not be relied on as such. Firstcall Research or any of its affiliates shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. Firstcall Research and/ or its affiliates and/or employees will not be liable for the recipients investment decision based on this document.

9 Firstcall India Equity Research: C.V.S.L.Kameswari Pharma & Diversified U. Janaki Rao Capital Goods B. Anil Kumar Auto, IT & FMCG M. Vinayak Rao Diversified G. Amarender Diversified Firstcall Research Provides Industry Research on all the Sectors and Equity Research on Major Companies forming part of Listed and Unlisted Segments For Further Details Contact: Tel.: / / Telefax: / info@firstobjectindia.com