GNFC shares jump over 17% on strong Q3 numbers and improved margins – check brokerage view

On the back of strong set of third quarter numbers, the shares of Gujarat Narmada Valley Fertilizers & Chemicals Limited (GNFC) touched an all-time high of Rs 535.3 per share, after surging by over 17 per cent on the BSE intraday on Monday in an otherwise subdued market.  

The stock of small-cap fertilizer company breached its previous all-time high of Rs 518.20 per share, hit on October 6, 2021. At around 02:21 pm, the stock was trading over 14 per cent higher to Rs 520.75 per share, as against 0.63 per cent decline in the Nifty50 index. 

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The fertilizer and chemical company reported best-ever quarterly performance in the December quarter (Q3FY22). It’s consolidated net profit more-than-doubled to Rs 540.78 crore from Rs 242.59 crore in the corresponding quarter of previous fiscal. 

Similarly, the consolidated revenue from operations in Q3FY22 grew by 58 per cent year-on-year YoY at Rs 2,380 crore, and the margins expanded 400 basis points at 28 per cent YoY. 

The company in its results filing said, there has been improved overall production and sales volume performance except for the product mix optimisation because of which the Q3 margins enhanced. 

Despite elevated input costs, the margins remained protected mainly due to support of higher realisations on output products front mainly led by chemicals as well as serving profitable product mix, the fertilizer company further said. 

On outlook, GNFC said that the company is in a position to leverage boom in specific products and optimize, both, realization and profits, with flexible and multiple product basket. The company is confident of stable performance balancing its product mix to serve markets. 

The stock in the last one year has surged over 133 per cent on the BSE, as compared to over 12 per cent rise in the S&P BSE Sensex. 

ShareKhan in its Q3 preview report had said, “Decent outlook for agri-input players given positive rabi sentiments but margin pressure a near term concern. Rising domestic demand and potential global market share gain provide massive growth opportunity for specialty chemical players.”