Chambal Fertilisers and Chemicals

Chambal Fertilisers and Chemicals’ (Chambal’s) adjusted PAT of Q2FY09 was better than expectation on the back of a sharp jump in the trading sales, resulting in an addition to the bottom-line. Chambal has shown a YoY growth of 130.2% in the adjusted PAT to Rs985.7m. The company has provided MTM losses of approx. Rs510m on trading creditor of US$170m, payable in July 2009. Hence, the reported PAT was Rs475.7m. Chambal’s Q2FY09 has declared a result which is standalone, while our annual estimates are consolidated.

Chambal has shown a YoY growth of 133.5% in sales to Rs17,451.3m, on the back of higher trading sales and fertilizer subsidy due to rising input costs. The company has added three ships in H1FY09 that resulted in a YoY growth of 45.4% in the shipping business to Rs1051.7m in Q2FY09. In Q2FY09, Chambal has charged the interest of capitalized new ships in the profit and loss account, instead of the cost of ships as done earlier. Hence, the interest cost jumped by 112.4% to Rs416.3m. Chambal has received entire outstanding fertiliser subsidies till August 2008.

The stock yields good dividend around 9% if bought sub Rs 40 levels. Investors looking for dividend yield can look at the stock.