In today’s edition of ‘Jain Sahab Ke Gems’, market analyst Sandeep Jain, while speaking to Zee Business Managing Editor Anil Singhvi, revealed a great strategic counter for investors. Today, he has recommended a stock that he said has potential to give high returns to the investors. The stock he picked today is Gujarat Alkalies and Chemicals and here is why. 

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Gujarat Alkalies has extremely good fundamentals and the stock has consolidated for a long time now. The downside risk on the stock is limited from current levels. Currently, Gujarat Alkalies is available at a good value, at low PE, low price to book multiple. Gujarat Alkalies should be purchased at current levels as some positive news was there in chemical sector.  

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Gujarat Alkalies is one of the largest producers of Caustic Soda in India. From an initial capacity of 37,425 TPA Caustic Soda, the company have grown to be one of the largest producers in India, with a capacity of 4,29,050 TPA, spread over 2 complexes at Vadodara and Dahej.  Gujarat Alkalies has already started to diversify and expand its existing infrastructure to consolidate its supremacy in Chlor-Alkali and other integrated downstream products. 

Gujarat Alkalies is engaged in the business of industrial chemical products. Prefix of Gujarat shows that this company is a semi-Government company. Many companies of Gujarat have some stake in the company. GNFC, GSFC and Gujarat Government promoted companies have stake in the company.   

The key reason for picking Gujarat Alkalies is that from here on, PSU companies and semi-government companies will surely do well. The Government is strongly focused on promoting Indian Industries. Import duties and levies related news is going to help companies in Chemical sector, including Gujarat Alkalies.  

Gujarat Alkalies is available at a P/E multiple of 14, book value of the company is Rs 660, while the current market price of the company is Rs 350. Market cap of the company is Rs 2500 cr, Reserves are close to Rs 4800 cr and the debt of Rs 110 cr is negligible. Sales CAGR for last 3 years is close to 10%, profit CAGR for past 5 years is 10%, and dividend yield of 2.32 is fantastic. Q2 FY21 results displayed strong results when compared to last 4 quarters. It is expected that results in the coming quarters will be stronger.  

FII / DII’s hold 6% stake in the company. Gujarat Alkalies stock has fallen significantly from the highs offering good value to the investors at current levels. The target of the Gujarat Alkalies is Rs 390 – Rs 400.