On May 23rd, the ALGO engine triggered a buy signal in IPL at $3.40. Since then the stock has traded in a moderate range of $3.30 to $3.60.
While we view the outlook as broadly positive given the ramp up of the WALA ammonia plant in Louisiana and domestic fertilizer demand, this has been offset by the upcoming change in their CEO and declines in global fertilizer prices.
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IPL is currently trading at 30% discount to its North American peers, and at 13x estimated FY 18 earnings, we see the upside potential into the $4.15 range over the medium-term.
At the same time, we expect the 2017 EPS of 21 cents to rise to 25 cents in FY18, which puts the stock on a forward yield of 4%.
IPL
