24th February, 2021

Company Overview: Gujarat State Fertilizers & Chemicals Ltd. (GSFC) is promoted by Gujarat State Investment Ltd
(GSIL) which is incorporated and owned by Gujarat Government. GSFC is in the business of fertilizers and industrial
chemicals; over the years it has extended portfolio to bio fertilizers, seeds, micro irrigation system and
educating\partnering with farmers

Company has many first to its credit from setting up first DAP fertilizer complex in India to first company to establish a
Caprolactam plant in 1974, first to recover Argon gas from Purge gas to foray into industrial gases to first company to set
up Melamine plant. GSFC is also the first company to having launched indigenous variety of Calcium Niterate and
Boronated Calcium Niterate.

Over these years, GSFC has evolved from a mere single product fertilizer company to having diversified portfolio and
interests in adding to the growth of agriculture sectors and associated farmer\partners.

GSFC has investments in subsidiaries, few of which are also listed in stock market and adding to its growth.

Investment Rational:

a) Clearance of subsidy dues: Budget 2021-22 has major focus towards agriculture like always. Although there were not
specific measures towards fertilizer but announcement of clearing subsidy dues in one shot will certainly help the
company. As on 31st March, 2020 subsidy dues of GSFC are estimated around INR 1791 cr and upon receiving the
payment from Govt. can help improve the leverage.

b) Improved financial performance: GSFC is expected to close financial year 2020-21 with a consolidated total income
of approx INR 7992 cr. and a net profit of INR 390 cr. With sales growth remaining Nil but net profit would jump to
254%. Low sales growth can be attributed to Covid-19. Company will post higher sales and profit in quarter ending on
March’21.

Company’s debt equity ratio is 0.22 and good to manage.

Quarterly result performances:

Qarterly (Cr) Dec20 Sep20 Jun20 Mar20 Dec19

Sales 2,146 2,110 1,636 1,862 1,807
Other Income 36 66 11 11 31
Total Income 2,182 2,177 1,647 1,874 1,838
Total
Expenditure 2,062 1,947 1,590 1,760 1,892
EBIT 120 229 57 113 -53
Interest 6 11 19 26 26
Tax 18 47 7 26 -23
Net Profit 95 171 30 61 -56

Company is having a EPS of 7.49 on quarter ended Dec’20. We expect company to post a net profit of around 60 crore
basis the robust demand and strong performance by the company. Company’s share is surely going to get re-rated for a
target price of INR 130 by Aug’21.

C) Value Unlocking: GSFC has invested in unlisted and other subsidiaries primarily from Gujarat region. The total value
of GSFC investment as on 24th Feb, 2021 is INR 3394.61 crore against the market capital of INR 3223 crore same day
which means the enterprise business of GSFC is available for free.

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Stock advisory\consulting- ajay,9810665813