Posted by Shirish
| Qtr & Yr Ended | Q2FY11 | Q2FY10 | FY10 |
| Net Sales (Rs Cr) | 1,021.95 | 609.89 | 2075.65 |
| Op. Profit (Rs Cr) | 59.35 | 37.57 | 130.61 |
| OPM (%) | 5.80 | 6.14 | 6.29 |
| Net Profit (Rs Cr) | 33.82 | 14.90 | 56.49 |
| NPM (%) | 3.31 | 2.44 | 2.71 |
| EPS (Rs) | 2.85 | 1.26 | 4.77 |
| Dividend (%) | 10 | 7 | 10 |
| Equity (Rs Cr) | 118.55 | 118.55 | 118.55 |
| Key Data Matrix as on 30.10.2010 | |||
| Current Market Price (Rs) | 41.9 | ||
| 52-Week High/Low (Rs) | 46.85/17.60 | ||
| Market Cap (Rs Cr) | 497.17 | ||
| Face Value (Rs) | 10 | ||
| Latest Book Value (Rs) | 32.70 | ||
| Dividend Yield (%) | 2.38 | ||
| Beta (Sensex) | 1.10 | ||
| P/E (x) TTM | 6.18 | ||
| P/BV (x) TTM | 1.28 | ||
| EV/ TTM EBIDTA( x) | 3.95 | ||
| Average Monthly Volume (Lakhs) | 3.3 | ||
| Major Shareholders as on 30 September 2010 | |||
| Promoters & Promoters Group (%) | 30.44 | ||
| Domestic Institutions (%) | 3.77 | ||
| Foreign (%) | 0.02 | ||
| Non-Institutions (%) | 65.77 | ||
Mangalore Chemicals and Fertilizers Limited (MCF), part of the UB Group with group shareholding of 30.44% is the manufacturer of both nitrogenous and phosphatic fertilizers in the State of Karnataka.The Company has capacity to manufacture 2,17,800 MT Ammonia, 3,79,500 MT Urea,2,55,500 MT Phosphatic, 15,330 MT Ammonium Bi-Carbonate and 33,000 MT Sulphuric Acid annually.The factory is situated on the banks of the Gurpur River,in front of the New Mangalore Port and the plant is also well connected,both by rail and road.
FINANCIALS: During FY05 to FY10 the Topline of the company grew by CAGR of around 19%, Operating Profit and Net Profit of the company has also grown by 25% and 20% respectively. In FY10 due to poor monsoon the Net Sales of MCF came down by 16% to Rs 2075.65 crore over FY09, Operating Profit also declined by 1.5% to Rs 130.61 crore while MCF has managed to report more than 100% jump in Net Profit to Rs 56.49 over FY09. In Q2FY11 the Net Sales of the company surged by 67.5%, Operating Profit and PAT also grew by 58% & 127% respectively. The OPM & PATM of MCF for the same period were 5.8% & 3.3% respectively.
INVESTMENT GROUNDS
Industry Outlook
India's agricultural sector is the foundation of the rural economy and all socio-economic privileges and hardships always revolve around it, and any change in its structure draws a corresponding impact on the existing pattern of social equality. Fertilizer being the key efficiency booster in the entire production process occupies a center stage in rural economy. It is so significant that even the Indian National political scenario gets influenced by any amendments in the Fertilizer Policy.In FY10 Due to poor monsoon the fertilizer demand was slack down but now in FY11 the demand for both Nitrogenous & Phosphatic fertilizers is increasing steadily and expected to grow at a compounded annual rate of 5%. With the domestic production almost stagnant and the demand supply gap widening, the supply deficit has to be met from imports.
Nutrition Based Subsidy will add Volume GrowthTo give the nourishment to Indian economy the government of India has also taken step to encourage the fertilizer sector in India and has implemented a scheme of Nutrient Based Subsidy scheme (NBS) with effect from 1.4.2010 and also announced concession rates for the year 2010-11 in advance, thereby facilitating import of higher quantities of Phosphatic and Potassic fertilizers. This move of the Government indicates a step towards further reforms in the fertilizer sector. MCF has also entered into agreements with leading suppliers of fertilizers abroad for import of DAP and MOP on a larger scale compared to last year.
Insured Gas Supply to improve the Margins
MCF is in process for receiving the gas supply to its Mangalore project and the work on the LNG terminal at Kochi is also progressing well. GAIL has already entered into a MOU with Governments of Karnataka and Kerala for right of use for laying the pipeline from Kochi to Mangalore. The gas pipeline connectivity to Mangalore is expected only by end of 2012. The Company is in final stage of concluding gas supply agreement with IOC and gas transportation agreement with GAIL. Considering the importance of fertilizer for ensuring food security in the country, Government of India has agreed to allocate gas on priority to fertilizer companies.
An Incredible Market Share in South IndiaMCF is the only manufacturer of fertilizers in the State of Karnataka. About 65% of the Company's products are sold in the State of Karnataka, which meets about 25% of the needs of the farmers in the State. The Company has maintained a modest share of the market in the neighboring States of Kerala, Tamilnadu, Andhra Pradesh and Maharashtra. MCF is also looking for diversifying into other products that are synergistic with the existing operations. In addition, MCF has increased imports of DAP and specialty fertilizers and a major thrust have been given to maximize trading operations and focus on the Integrated Nutrient Management business.
