Crisil rates 3/5 fundamental grade on Dhunseri Petrochem & Tea

MUMBAI: Rating agency Crisil has maintained Dhunseri Petrochem & Tea's fundamental grade of 3/5 and valuation grade of 5/5 and set the a target price for its stock at Rs 184.

Dhunseri's Q1FY13 revenues were higher than CRISIL Research's expectations while earnings were lower. Overall revenues remain flat y-o-y, with contraction in polyethylene terephthalate (PET) margin q-o-q. Tea business being seasonal in nature saw improvement in margin on y-o-y basis.

Further, the company incurred forex loss of Rs 444 mn, which dented profitability. The company reported EPS of Rs -1.9 against Rs 4.7 in Q4FY12 and Rs 6.2 in Q1FY12.

The 210,000 tpa PET capacity at Haldia (West Bengal) commenced trial run in July and will start commercial production from August-end. "The company has incurred 50 pc capex on its 420,000 tpa greenfield plant in Egypt and expects to start production by H1FY14; as these plants go into operation, the company will be one of the top 10 PET producers globally, leading us to maintain the fundamental grade of 3/5" said a note by Crisil.

Crisil valued Dhunseri's stock price at Rs 184 per share post revision in estimate and said "at this fair value, the implied P/E multiples are 8.9x FY13E and 4.1x FY14E EPS".