Fundamentals

GUJARAT FLUOROCHEMICALS 

Ticker : 500173 BUY: Rs 860.70
Target: Rs 959 

Gujarat Fluorochemicals, a part of the Inox Group, is the largest producer of CFC and HCFC gases. It has also forward integrated into poly tera fluoro ethylene (PTFE) and other value-added fluoropolymers. In FY18, it generated 43 per cent revenue through exports. It has planned to de-bottleneck the PTFE capacity by 30 per cent from 16,500 MT to 21,000 MT, which would generate additional revenue from Q3FY19. It has introduced new fluoropolymers for which commercial orders have been bagged. It has commercialised two molecules for which a plant has been set up and would receive clearances in FY19. Of the total planned capex of Rs 450 crore, the company had expended Rs 300 crore in FY18. Also, it delivered robust growth in topline and profits in Q1FY19. Considering these factors, we recommend it as a BUY. 

SELAN EXPLORATION TECHNOLOGY 

Ticker : 530075 BUY: Rs 249.75
Target: Rs 278 

The company is engaged in the business of exploration and production of oil (90 per cent revenue) and natural gas (10 per cent revenue). It has a combined exploration area of 190 sq.km. situated in the Cambay basin of Gujarat. It produces 600 barrels of fuel per day and produced 2,01,276 barrels in FY18 as against 1,65,000 barrels in FY17. It extracted 7.62 mn cubic metres of natural gas in FY18 as against 6.04 mn cubic metres in FY17. In Q1FY19, the revenue was up by 80.3 per cent YoY to Rs 26.92 crore. Its EBITDA grew by 296 per cent YoY to Rs 14.6 crore with margin of 54.4 per cent. Its net profit jumped by 320 per cent YoY from Rs 3.39 crore to Rs 14.25 crore. It is a debt-free company and is trading at an attractive P/E of 12.4x. Thus, we recommend it as a BUY.