2QFY12 Results Update
SECTOR: CHEMICALS/FERTILIZERS
Deepak Fertilisers
STOCK INFO.
BLOOMBERG
BSE Sensex: 16,786
S&P CNX: 5,050
DFPC.IN
REUTERS CODE
24 October 2011
Previous Recommendation: Buy
YEAR
END
SALES APAT ADJ.EPS
(Rs Cr)
Rs
(Rs Cr)
Rs
172
184
224
(
Rs
)
17.0
20.5
25.4
EPS
Gr.(%)
71
21
24
PE
(X)
9.7
8.0
6.5
P/BV
(X)
1.6
1.4
1.2
EV/
EBITDA(X)
5.7
5.2
3.9
DIV. YLD ROE
(%)
2.7
3.0
3.3
(%)
17.3
18.2
19.5
BUY
Rs168
RoCE
(%)
17.7
16.6
19.6
DPFE.BO
Shares Outstanding (cr)
52-W H/L Range (Rs)
1/6/12 Rel. Perf (%)
Market Cap. (Rs cr)
Market Cap. (US$ m)
8.8
212/145
2/6/3
1,482
296
FY10A 1,288
FY11A 1,562
FY12E
2,160
Results - Brief Overview
Deepak Fertilizers profits were in line with estimates. Performance was driven by improvement in the fertilizer segment.
Fertilizers had a 22% rise in revenues with 191% growth in profits on account of enhanced margins. The profit growth
was aided by a 45% rise in purchased speciality fertilizers sales and 54% rise in own manufactured fertilizer sales.
Higher prices for bought-out inputs such as Ammonia has restricted EBIT growth in Chemicals at 26% despite a
volume-led 50% revenue growth .
Reality division's performance is disappointing and is unlikely to improve until after 1HFY13.
Sharp rise in interest cost y/y is due to capitalization of interest in the last quarter.
The TAN plant will be shut-down for 3 weeks in October and this could impact 3QFY11 numbers marginally. Further,
sales have been subdued on account of Telengana strife and problems on account of monsoons and mining.
Rs
Cr. (Consolidated)
Revenue
Expenditure
EBITDA (excl. Other inc.)
Other Income
Interest
Depreciation
Profit before tax
Tax
RPAT
APAT
EBIDTA (%)
Tax rate (%)
Sales-Chemicals
Sales-Fertilizers
Sales-Realty
EBIT-Chemicals
EBIT-Fertilizers
EBIT-Realty
QE Jun-10
410.8
334.2
76.6
7
9.0
17.0
57.4
16.0
41.4
41.4
18.7
27.9
235
189
3
61
12
-1
QE Mar-11
473.9
361.0
112.9
7
12.7
19.1
87.9
24.0
63.9
63.9
23.8
27.3
333
147
2
94
23
-4
QE Jun-11
577.2
478.2
99.0
8
15.0
16.6
75.2
21.3
53.9
53.9
17.1
28.3
351
231
2
78
35
-3
50
22
-39
26
191
333
6
56
6
-18
53
N.A.
% y/y
41
43
29
13
65
-3
31
33
30
30
% q/q
22
32
-12
15
18
-13
-14
-11
-16
-16
Valuation and view
The new Ammonium Nitrate plant will be a driver of earnings in FY12 and beyond. We have introduced FY13 earnings
with 17% revenue growth and 18% profit growth. Key drivers of the valuations will be visibility on utilization of the new
Ammonium Nitrate plant and clarity on investment in the proposed Australian plant. We reiterate our target of
Rs200.
Any negative from the CAG-driven enquiry into pre-2009 utilization of APM gas for non-fertilizer purposes will
impact sentiments negative. This is a key risk for investors in addition to slow-demand in India for TAN due to mining-
related issues.
Ravi Shenoy
(ravi.shenoy@MotilalOswal.com); Tel: +91 22 30896865

Deepak Fertilizers
Deepak Fertilizers- Financial & Valuation
INCOME STATEMENT
Y/E MARCH
2009A
2010A
(
Rs
CRORE)
2011A 2012E
2013E
RATIOS
Y/E MARCH
2009A
2010A 2011A
2012E 2013E
Net Sales
growth (%)
Other Income
Total Income
Mfg. & other expenses
Staff Costs
Admn, S&D Exp.
Other Expenses
Total Expenditure
EBITDA
1,457
29
45
1,502
1,067
78
29
71
1,245
1,288
-12
70
1,358
857
87
24
41
1,009
348
27
64
46
238
66
172
98
1,562 2,160
21
38
36
35
1,598 2,195
1,037 1,487
107
134
29
43
51
54
1,224 1,718
374
24
71
44
258
74
184
7
477
22
92
63
322
98
224
22
2,531
17
40
2,571
1,738
167
56
59
2,020
552
22
108
67
377
113
264
18
Adjusted EPS
Growth (%)
Cash EPS
Book Value
DPS
Payout (Incl. Div. Tax) (%)
Valuation (x)
P/E (x)
Cash P/E (x)
Price/Book Value (x)
EV/EBITDA (x)
EV/Sales (x)
Div. Yld (%)
Return Ratios (%)
RoE (%)
RoCE (%)
Leverage (x)
Debt/Equity (x)
10.0
-27
16.7
90.4
4.0
47
17.0 20.5
71
21
24.3 28.6
103.4 120.9
4.5
5.0
31
29
25.4 29.9
24
18
35.9 46.3
139.9 179.8
5.5 6.0
25
23
256
% of Net Sales
18
Depreciation/Amortization
59
Finance Charges
40.7
PBT
156.1
Tax
69.1
PAT
87
growth (%)
-28
-
-
-
-
-
-
11.5
15.0
0.8
-
-
-
-
-
-
17.3
17.7
0.8
8.0
5.8
1.4
5.2
1.3
3.0
18.2
16.6
0.7
6.5
4.6
1.2
3.9
0.9
3.3
5.5
3.6
1.0
3.2
0.7
3.6
19.5 19.7
19.6 21.4
0.5
0.4
BALANCE SHEET
Y/E MARCH
2009A
2010A 2011A
(Rs CRORE)
Rs
2012E 2013E
CASH FLOW STATEMENT
(Rs CRORE)
Rs
2009A
2010A 2011A
2012E 2013E
Y/E MARCH
Equity Share Capital
Preference Share Capital
Reserves
Shareholders' Funds
Debt
Net deferred tax
SOURCES OF FUNDS
Net Block
Capital WIP
Investments
Current Assets
Inventories
Sundry Debtors
Cash and Bank Balances
Loans and Advances
Other Current Assets
Net Current Assets
Misc expenses
88
0
722
810
608
69
1,487
787
244
91
635
104
278
160
93
0
364
1
88
0
836
731
66
88
0
978
775
81
88
0
88
0
PBT before EO items
Add :
Interest
(Inc)/Dec in WC
Others
Depreciation
156
59
41
-55
-14
238
64
46
7
-128
228
-240
8
-230
123
-40
-46
135
49
47
160
207
258
71
44
-55
-76
242
-136
0
-136
44
-44
-44
0
-44
62
207
269
322
92
63
-57
-87
334
377
108
67
-39
-99
414
1,145 1,353
1,234 1,441
675
100
576
123
924 1,066
CF from Operating activities 188
(Inc)/Dec in Fixed assets
Others
-235
25
1,721 1,922
809 1,017
414
94
639
116
202
207
113
0
235
403
0
271
114
828
157
250
269
152
0
307
521
0
2,009 2,140
1,296 1,438
0
114
217
346
291
152
0
406
600
0
0
114
254
405
241
152
0
464
589
0
-100 -250
0
0
-100 -250
-100
-49
-63
0
-99
-48
-67
0
CF from Investing activities -218
Inc/(Dec) in debt
Dividend paid
Less: Interest paid
Others
CF from financing activities
Inc/(Dec) in cash
Add: Beginning balance
Closing Balance
258
-35
-41
235
159
128
32
160
1,006 1,052
-212 -214
22
269
291
-50
291
241
Current Liabilities & Provisions 271
APPLICATION OF FUNDS 1,487
1,721 1,922
2,009 2,140
24 October 2011
2

Deepak Fertilizers
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Deepak Fertilizers
No
No
No
No
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