GNFC: Ready for rich reward

GNFC: Ready for rich reward

Shares of Gujarat Narmada Valley Fertilizers & Chemicals (GNFC) gained more than 4% to Rs 223.30 apiece on NSE as fertiliser maker is expected to benefit from the Government’s decision of imposing a provisional anti-dumping duty on imports of Toluene Di-isocyanate (TDI) having isomer content in the ratio of 80:20.
The anti-dumping duty has been imposed on imports from the European Union, Saudi Arabia, Chinese Taipei and UAE, for six months beginning December 2.

GNFC is the only Producer of TDI in India, and the prices of this key raw material has been on the rise. This price rise along with the imposition of anti-dumping duty, will provide a booster dose to its earnings prospect.
Average TDI prices (US$) are up 20% Q3 till date compared to Q2 average. Nonetheless, there has been some increase in input costs too. Government also imposed ADD on TDI which is expected to benefit TDI realisations and demand thereof. Apart from TDI, other chemical prices have risen till date in Q3 which may benefit overall performance for the company. Acetic Acid and Aniline prices have risen 30-35% from early October levels while Methanol prices have increased 15% since early October.

During Q2, GNFC reported Rs 133 crore EBIT from its chemicals segment predominantly supported from increased TDI prices. In Q3, apart from some softening in TDI margins, other chemicals are likely to support the chemicals performance. Overall, based on 2 months price performance till date in Q3, numbers for the current quarter may surprise with better than Q2 performance particularly from the chemicals segment.

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