Buy GHCL, target Rs 365: Kotak Securities Limited

Kotak Securities Limited has a buy call on GHCL with a target price of Rs 365.

The current market price of GHCL is Rs 311.55.

Time period given by the brokerage firm is a year when GHCL price can reach defined target.

"GHCL’s numbers were in-line with estimates, with inorganic chemical segment continued with its strong performance, while home textile business continued to disappoint. Net sales during the quarter grew 8.4 per cent YoY to Rs 7.18bn (flat QoQ), driven by growth in inorganic chemical business, the benefit of the same was partially offset by a decline in home textile performance (down 12 per cent QoQ). EBITDA during the quarter declined 15.2 per cent YoY to Rs1.38 bn, with an EBITDA margin of 19.2 per cent. The company reported PAT of Rs712 mn. The sequential growth in PAT is contributed by higher other income, which is income from transportation charges from customers under GST and the run rate is likely to continue going forward. Given the tightness in the soda ash market and firm prices, the company further raised the soda ash prices by 2 per cent in the month of February 2018, to offset the rise in input costs. Though textile business performance likely to remain subdued, we are upbeat about the performance in the soda ash segment. Looking at the financial parameter and upside in soda ash business, we continue to maintain BUY rating, with a target price of Rs 365. At CMP, the stock is trading at 8.9x/7.8x/7.0x FY18E/FY19E/FY20E earnings," Kotak Securities said in a report.