Scripscan:Gujarat Alkalies & Chemicals Ltd
cmp:115
Code:530001
Story:Gujarat Alkalies is India's largest and one of the more competitive producers of caustic soda. Its products — caustic soda and chlorine — find application in a wide range of industries such as paper, aluminium, textiles and soaps and detergents. The buoyant trend in the user industries is likely to lead to continued robust demand for caustic soda. The diversified nature of its customer base provides a cushion against a decline in demand from any particular industry. The company should capitalise on the likely increase in demand and also enhance its market share. As the company has consistently operated at high levels, the expansion plans in near future are critical as they would remove a constraint on revenue growth.At the global level, for the chlor-alkali industry, chlorine is the main product and not caustic soda, unlike in India. The global product pattern has led to threat of imports of caustic soda. As the industry environment appears conducive, steady rise in earnings levels is likely to create scope for gains.INVESTORS with a long-term perspective can buy the stock of Gujarat Alkalies at dips. Likely firm trends in caustic soda price and the likely price stability at higher levels, a boost to revenues from expected firm prices,and the possibility of a further decline in energy costs leading to margin expansion are all likely to drive growth in earnings.
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