One of the small-cap stocks engaged in the business of chemicals, yarn, and commodity products. The chemical stock is in focus after Emkay Global Financial Services Limited gave a target of Rs. 900, which has an upside potential of 27.81 percent.
Stock Price Movement:
In Wednesday’s trading session, GHCL Limited’s share plunged by 1.87 percent from the previous close of Rs. 717.55. The stock opened at Rs. 718.25 and is currently trading at Rs. 704.15, with a high of Rs. 724 and a low of Rs. 702.50. The market capitalization now stands at approximately Rs. 6,742.57 crore.
What is the news?
Emkay has set a target price of Rs 900 for GHCL, which suggests a potential upside of 27.81 percent from its current market price of Rs 704.15. This optimistic target is based on GHCL’s strategic initiatives, including its expansion in high-margin derivatives like bromine, backward integration efforts, and expected recovery in soda ash prices.
These factors are expected to drive significant growth, improve margins, and position the company well for a recovery in the soda ash market.
Target Rational:
Emkay’s positive outlook on GHCL is driven by expected soda ash price recovery due to supply-demand dynamics. GHCL’s shift to high-margin derivatives, cost efficiencies from backward integration, and a salt field development in Kutch will further improve margins.
The company’s strong capital expenditure execution is anticipated to drive significant EBITDA growth, supporting its long-term growth prospects.
Soda Ash Segments:
GHCL is strategically positioning itself at the bottom of the soda ash cycle, focusing on operational efficiency and customer service despite market volatility. With increased imports, the company is committed to cost optimization to maintain competitiveness and profitability.
Bromine Business Expansion:
GHCL is expanding its bromine business, with a current salt capacity of 0.8 million tons, and plans to increase it to 3 million tons. The bromine project capacity will grow from 2,800 tons to 10,000–12,000 tons, aiming to become a major market player.
New Projects
GHCL Limited’s new projects are progressing as planned, with contributions expected from vacuum salt and bromine projects by FY26.
The company is advancing two phases of a greenfield soda ash facility, each with a 5.5 lakh ton capacity, and developing the Zara Zumara land parcel in Kutch to enhance salt and bromine operations.
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Outlook:
GHCL is focusing on operational efficiencies and growth initiatives. The company is expanding its soda ash production by 500,000 MTPA by 2025 and emphasizes innovation in sustainable products, packaging, and environmental stewardship.
Recent quarter results and ratios:
GHCL Limited’s revenue has decreased from Rs. 805 crore in Q2 FY24 to Rs. 793 crore in Q2 FY25, which has down by 1.49 percent. The net profit of GHCL Limited has grown by 8.39 percent from Rs. 143 crore in Q2 FY24 to Rs. 155 crore in Q2 FY25.
GHCL Limited’s revenue and net profit have grown at a CAGR of 11.44 percent and 34.55 percent, respectively, over the last three years.
In terms of return ratios, the company’s ROCE and ROE should be 20.6 percent and 17.3 percent, respectively. The debt-to-equity ratio of the company is to be 0.06x, which shows the company is almost debt-free. GHCL Limited’s EPS is to be Rs. 55.4.
Company Overview:
GHCL Limited is a prominent Indian company primarily engaged in the production of soda ash, textiles, and consumer products. The company was established on October 14, 1983, under the name Gujarat Heavy Chemicals Limited.
The company was later rebranded as GHCL Limited in 2003. The company operates through various segments, including inorganic chemicals, home textiles, and edible salt.
Written By – Nikhil Naik
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