GSFC

State-promoted Gujarat State Fertilizer Corporation Ltd (GSFC) posted  a good set of numbers. For Q2FY15, it posted a 22% (YoY) jump in net profit at Rs.124 crore on a 4.5% rise in net sales at Rs.1482 crore. The company, in a statement issued with the results stated that GSFC had achieved the highest turnover in the second quarter over the last five years. This good performance was on account of consistency in supply of raw materials such as benzene, sulphur ammonia etc.

Post the declaration of the numbers, the stock price slumped despite good numbers because the performance missed most of the estimates of brokerage houses and analysts. They had expected a much better performance but performance mainly lagged behind on account of its chemical division, which reported poor sales on back of lower demand. But the good news here is that its fertilizer segment did well, reporting a 13% (YoY) and up 40% (QoQ) growth in sales, with EBIT surging over 2.5 times YoY and 27% QoQ. On the other hand, its chemicals segment EBIT fell 32% (YoY) and largely remained flat, down some 2% sequentially. Point to be noted here – interest cost has been down consistently since Q1, in the range of around Rs.4 crore compared to Rs.12 crore in Q2FY14.  This has been possible because the company is now managing its working capital pretty well, with receivables down 21% since end of FY14 and this has helped bring down the overall interest cost. With increase in fixed cost subsidy from the Govt, the discounts and offers have come down and this, looking ahead is expected to do well.