"FAIR VALUE" OF FFC RS. 145

"FAIR VALUE" OF "FFC" RS. 145

Current Price Rs.120.0

FFC offers 27% TSR (including 10% dividend yield) from our Dec 08 PT of Rs.145/share.We expect FFC to show a stable Gross profit margin of 33% during CY08-CY10, while the net profit margins areestimated to average around 16% during the same period. FFC does not have any expansion plans to its core businessin the foreseeable future, and given the cash rich nature of the company, we expect FFFC to continue maintaining 100%payout ratio in the future. Major risks to our valuation include a more/less than anticipated increase in Urea prices, shortage of Feedstock gas and change in subsidy on DAP, Urea and gas & increase in discount rate.