2010VP16 GUJARAT ALKALIES & CHEMICALS LTD

GUJARAT ALKALIES & CHEMICALS LTD
BSE: 530001 NSE: GUJALKALI

GUJALKALI is a company promoted by Govt of Gujarat in 1973 is based at Vadodara and Dahej,

GACL which started with an initial capacity of 0.37 Lakh TPA Caustic Soda, we have grown to be the largest producer in India, with a capacity of 3.58 lakh TPA and is engaged in the production and sale of caustic soda & related items , caustic potash & related items,chlormethane, sodium cynadies, hydrogen peroxide, Chlorine gas, Hydrochloric Acid, Sulphuric Acid, Phosporic Acid & Poly Aluminum Chloride
The Dahej unit also has 90 MW Captive Power Plant (CPP) for regular and economical power supply.
As power is the major input for production of Caustic Soda and constitutes about 65% - 70% of the cost of production, the Company alongwith other Corporations like M/s. GSFC, Petrofils Co-operative Ltd. and Gujarat Electricity Board promoted a gas based power unit in Vadodara under the name of Gujarat Industrial Power Company Ltd. (GIPCL) during the year 1985. As a promoter of GIPCL, as the plant is gas based the Company gets low cost power.

Its produts primarily serves industries like textiles, pulp and paper, soaps and detergents, alumina, water treatment, petroleum, fertilizers, pharmaceuticals, agrochemicals, and dyes and dyes intermediates.

The company exports its products to the United States, Europe, Australia, Africa, the Far and Middle East countries, the People’s Republic of China, and South Asian markets.


For the year 2009-10 the company performance was as follows
Turnover Rs 1315.87 crore
EBIDTA Rs 266.15 crore
Dep&Int Rs 139.03 crore
Other Income 24.00 crore
Income Tax 25.57 crore Credit
NetProfit Rs 171.84 crore

EPS 23.4 PE 5.11 Div 3


For the year 2010-11 the company performance is expected to be
Turnover Rs 1390 crore
EBIDTA Rs 270 crore
Dep&Int Rs 142 crore
Other Income 10.00 crore
Income Tax 41 crore Debit
NetProfit Rs 97 crore

EPS 13.2 PE 9.01 at CMP 119 Dividend yield expected 2.52 pc (at Rs 3)

The valuation of company is such that its Market capitalisation as on 01.09.2010 at CMP of Rs. 119.8 per share is Rs 879 crore where as the Market value of investment in group companies is worth Rs 311.38 cr (Rs. 43.9 cr in Gujarat State Fertilizers and Chemicals and + Gujarat Industrial Power Company Limited Rs. 267.48 cr)

book value of investment in group companies is Rs 40.4 crore (Rs 5.5 per share) making an unrealised profit of 271 crore (Rs 36.87 per share)

THE GACL AT 119.8 IS TRADING AT DEEP DISCOUNT TO ITS INTRINSIC VALUE
CONSIDERING

1) THE MARKET VALUE OF INVESTMENT PER SHARE IS 36.87 AS AGAINST INVESTED VALUE OF RS 5.5
2) AS AGAINST THE REPLACEMENT VALUE OF LAND, PLANT AND MACHINERY OF RS 3600 CRORE ( 489 PER SHARE) AND NET VALUE OF Rs. 2950 CRORE (Rs. 401 PER SHARE)
3) The book value of GACL share is Rs 189 WHEREAS the share quoting at Rs 119 is at a huge discount