BSE 500 Chemical Stock: Rs 4/Share Dividend Recommended; Buy The PSU Stock?

The Gujarat government owns Gujarat State Fertilizers & Chemicals Limited (GSFC), an Indian company that produces chemicals and fertilizers. It is a joint venture between Gujarat State Fertilizers & Chemicals Ltd. (GSFC) and the Gujarat government. In 1976, it was established in Bharuch, Gujarat. The PSU stock is the subject of attention after the corporation released its financial results for the quarter and year that ended on March 31, 2024.

GSFC Dividend

The Board of Directors considered and approved the "Recommendation of final dividend of Rs. 4 per equity share of face value of Rs. 2 each fully paid-up (i.e. 200%) for the year ended 31st March, 2024, on 39,84,77,530 equity shares of the Company. The payment of dividend is subject to approval of shareholders at the ensuing Annual General Meeting for the financial year 2023-24. Upon approval of shareholders, the dividend declared will be paid within 30 days of declaration. The date of Annual General Meeting, Book Closure Date and Dividend Payment Date will be intimated in due course," said GSFC in a regulatory filing.

GSFC Financials

For the quarter that ended in March 2024, GSFC recorded a net profit of Rs 21 crore, a drop of 91.25 per cent year on year from Rs 240 crore during the same time the previous year. Total sales for the company dropped 18.2 per cent year on year to Rs 1,992 crore from Rs 2,437 crore in the March quarter of the prior year. In the quarter under review, the company's EBITDA was Rs 25 Cr, down from Rs 342 Cr in the corresponding period last year.
"FY 23-24 was a challenging year for the company due to external headwinds in both Fertilizers and Industrial Products segments. The company registered sales de-growth of 21% and EBIDTA de-growth of 51% YoY. Fertilizer segment top-line and bottom-line were dampened by steep downwards revision in subsidy rates. YoY Fertilizer sales decreased by Rs 2158 Crores (25%) in value terms despite increase by 1.08 Lakh MT (6%) in volume terms," said the company in a statement.

"While raw materials prices softened YoY, it was exceeded by the decrease in subsidy rates, thus squeezing fertilizers EBIT margins from 17% to 5%. On the Industrial products front, lower sales realization of major products squeezed the top line by 8% YoY. With high net worth proportion in the overall balance sheet size and long-term debt free position, the company has a strong financial position to fund its capex plans and wither future shock," Gujarat State Fertilizers & Chemicals said in its earnings statement.

GSFC Share Price Target

Deven Mehata - Equity Research Analyst at Choice Broking said, "GSFC is currently trading at 222 levels, having corrected from its resistance at 245. Recently, the stock has breached its support at 231, which was aligned with its short term (20 Day) and medium term (50 Day) Exponential Moving Averages (EMA). This breakdown indicates weakness in the stock's price action."

"On the downside, GSFC has a strong support level near 215, which coincides with its long term (200 Day) EMA. This level is crucial; if the stock fails to hold above 215, it could experience a further correction, potentially moving towards the next support level at 195. Investors currently holding GSFC should consider exiting on any bounce back towards higher levels. This strategy helps mitigate losses as the stock appears to be in a downward trend after breaking multiple support levels. Monitoring the 215 support level is essential for making informed decisions about holding or selling the stock," the analyst recommended.

Disclaimer

The recommendations made above are by market analysts and are not advised by either the author, nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.