Gujarat State Fertilizers & Chemicals (GSFC) Ltd is engaged in the manufacturing of fertilizers and industrial products, the important one being caprolactam, melamine & nylon6. Its promoter if the Gujarat state government and GSFC in turn has promoted GNFC and has sizable stakes in several other Gujarat state ventures, with current market value of > 4000 crores about 90% of its present market cap of Rs. 4400 crores. A strong revival in chemical prices and favorable government policies have lead to very strong near term performance and this may be sustainable for a few more quarters till the cycle turns. We have a neutral weight rating despite cheap valuations due to cyclical nature of business and government controls on fertilizers. Stock could get re-rated if there is a trigger like privatization / divestment of investments – 04-06-2021 Rating: Neutral Weight Recommendation: Hold
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