Recommendations from Chemical Sector
The scrips in this column have been recommended with a 15-day investment horizon in mind and carry high risk. Therefore, investors are advised to take into account their risk appetite before investing, as fundamentals may or may not back the recommendations.
Gujarat Alkalies and Chemicals Ltd.
CMP - Rs 655.10
BSE CODE : 530001
Volume : 33,681
Face Value : Rs 10
Target Rs 721
Stoploss Rs 608. (CLS)
The company is engaged in the business of manufacturing basic chemicals such as sodium cyanide, sodium ferrocyanide, chloromethanes, hydrochloric acid, caustic potash, potassium carbonate, phosphoric acid (85 per cent) and hydrogen peroxide. The company exports its products to USA, Europe, Australia, Africa, the Middle East countries, China and South Asian markets. It recorded a surge of 29.38 per cent in net sales and operating income from Rs 638.25 crore in Q1FY21 to Rs 825.76 crore in Q1FY22. The operating profit also improved from Rs 132.75 crore in Q1FY21 to Rs 164.02 crore in Q1FY22. The quarter resulted in net profit of Rs 66.36 crore in Q1FY21 crore to net profit of Rs 75.04 crore in Q1FY22. The company has been awarded a patent for the manufacture of speciality chemical Hydrazine Hydrate, which is widely used in various industries. It plans to set up a manufacturing plant with an investment of Rs 405 crore to reduce import dependence, indicating optimistic outlook. Hence, we recommend BUY.
Linde India Ltd.
CMP - Rs 2,535.55
BSE CODE : 523457
Volume : 9,404
Face Value : Rs 10
Target : Rs 2,789
Stoploss : Rs 2,352 (CLS)
Linde India Ltd. is a leading supplier of gases and related products and services in India. The company is primarily engaged in the manufacture of industrial and medical gases and construction of cryogenic and non-cryogenic air separation plants. The company has witnessed a jump of 36.98 per cent in net sales and operating income from Rs 370.30 crore in Q1FY21 to Rs 507.22 crore in Q1FY22. The operating profit also improved from Rs 507.22 crore in Q1FY21 to Rs 140.97 crore in Q1FY22. The quarter resulted in net profit of Rs 34.72 crore in Q1FY21 crore to net profit of Rs 62.36 crore in Q1FY22. Recently, Linde India’s joint venture company, Bellary Oxygen, has accepted JSW Steel Ltd.’s offer for the purchase of an 855 tonnes per day air separation unit and other related assets owned by the aforesaid joint venture company. Also, the post-pandemic demand recovery in the market coupled by strong financial growth has led to improvement in operating profit and net profit. Hence, we recommend BUY.
(Closing price as of Dec 13, 2021)