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Wednesday, September 2, 2009

Stock Market Tips - Gujarat Alkalies & Chemicals - Mid Cap Stock

Gujarat Alkalies and Chemicals is a mid cap stock to buy available at good valuations. It is trading (CMP. Rs.113) way below it's book value(Rs. 173), at P/E of only 4.8 and even have a dividend yield of 3%.


Company Overview
Gujarat Alkalies and Chemicals Ltd was incorporated in March 1973. It was financed by Gujarat Industrial Investment Corporation Limited, a wholly owned corporation of the Government of Gujarat. The improvement in the working of the company strongly depends on the higher demand for chlor-alkali industry products and revival in both international and domestic caustic soda prices. The management of the company is optimistic that things will turn out in favour of the company.

Have a look at the 5 year chart of the stock below. It has been a constant dividend yielding stock being a state government establishment. The stock trades cyclically and does not shows growth over longer period of time. But this nature of stock trading can be used for short and medium term trading. We can buy it for a short term/medium term investment to fetch good returns.

Stock Market Tips - Gujarat Alkalies & Chemicals - Mid Cap Stock
Checkout the latest quarter results on company website: http://www.gujaratalkalies.com/new/q1_20092010.htm

Products & services
The main activities of Gujarat Alkalies and Chemicals are developing, manufacturing and distributing caustic soda lye, chloromethanes, caustic flakes, chlorine gas, sodium cyanide, liquid chlorine, hydrochloric acid, hydrogen gas, sodium ferrocyanide and related chemicals.

Gujarat Alkalies and Chemicals have two plant sites. One is situated at 15 km North of Vadodara and the other is located at Dahej, in Bharuch district. The company commissioned this 90MW captive combined cycle co-generation power plant to reduce its power costs and achieve self-reliance in its power requirements. It embarked upon a diversification plan in April 1981 to produce 2000 MTA of sodium cyanide. The company mainly exports to Australia, China, Japan, South Africa and Egypt.

Market Cap 830.20
* EPS (TTM) 23.93
* P/E 4.72
* P/C 2.91
* Book Value 173.03
* Price/Book 0.65
Div(%) 35.00
Div Yield(%) 3.10
Market Lot 1.00
Face Value 10.00
Industry P/E 8.57

Valuation
At current market price, stock is trading at an attractive valuation of 4.8 P/E multiple of its FY2010 estimated earnings. We Recommend investors to buy stocks of “GACL” for short and medium term investment perspectives. Short term target could be around Rs. 135.

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