Karvy Stock Broking has maintained its outperformer rating on Tata Chemicals with a price target of Rs Rs 166 in its April 1, 2009 research report.
“Tata Chemicals formally signed gas sale and purchase agreements (GSPA) with Reliance Industries (RIL) on March 27 2009. It has also signed gas transportation agreements with Reliance Gas Transportation Infrastructure Ltd (RGTIL), a Reliance group company. Tata Chemicals will get 0.88 million cubic meters per day (mmscmd) of gas from KG-D6.”
“We have increased our operating profit margin estimates from 16% in FY10 to 16.7%. The operating margin expansion would be as result of increase in urea realisation and reliability of natural gas supplies (feedstock for Urea). Consequently, we have increased our net profit estimates for FY10 by 8.6% from Rs 6,193 million to Rs 6,727 million. On account of assured supply of KG-D6 gas, we have revised our PE valuation from 5.5x10E to 6x10E earnings. Consequently, we have increased our target price from Rs 140 to Rs 166 and maintain our Outperformer rating on stock,” says Karvy Stock Broking’s research report.
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