Buy GHCL, target price Rs 298: HDFC Securities

HDFC Securities has buy call on GHCL with a target price of Rs 298. The current market price of GHCL Ltd. is Rs 236.
GHCL Ltd., incorporated in the year 1983, is a Small Cap company (having a market cap of Rs 2255.14 Crore) operating in Chemicals sector.

Financials
For the quarter ended 31-12-2020, the company reported a Consolidated Total Income of Rs 820.77 Crore, up .58 % from last quarter Total Income of Rs 816.06 Crore and down -3.33 % from last year same quarter Total Income of Rs 849.08 Crore. Company reported net profit after tax of Rs 117.57 Crore in latest quarter.

Investment Rationale
GHCL has an established position in the domestic soda ash industry, which is oligopolistic in nature with three top players. It has captive source of raw material for lignite, limestone and salt, leading to cost competencies. Further, its soda-ash division meets most of the power requirement through captive sources. Thus, given its consistent ability to generate cash and sustainable demand across sectors, the brokerage is positive on the soda ash business. The outlook for Home Textile business has also enhanced substantially, given the improving margin profile, led by firm pricing and cost initiatives.

Promoter/FII Holdings
Promoters held 19.3 per cent stake in the company as of Sept 30, 2020, while FIIs held 14.3 per cent, DIIs 21.2 per cent and public and others 45.2 per cent.