I agree with you. The increased tax outflow means that FY 12 EPS should almost equal FY 11 EPS. So the stock will not go up anytime soon.
However, I think the company has a good market share. Margins from Q1 - Q4 FY 11 have been increasing from 18 - 24%.I do not think it is fair to compare margins on a Q-o-Q basis as any input price increases will only be realised in the subsequent quarter. That is the reason for low margins in Q1 FY 11 which were made up in subsequent quarters.
You should bear in mind that there are few business out there with a >20% EBITDA margin. Even a 15% EBITDA margin is very healthy in the chemicals sector.
Im fairly confident of management and their dividend payout is good. They also hold a substantial stake >70% and do not have any competing business interests. The MD (Vinati) I think has done her masters from the US and recently negotiated long-term contracts with chemical companies in the US.
They have also taken out a loan from the World Bank to increase capacity significantly.
Overall I would recommend keeping this on the radar and getting into it if prices go below rs 40 which Im sure it will over the next 2 years.
My only concern is with so much capacity coming onstream and oil prices below $85, demand for their products mights drop just when supply is high. This will affect realisations.
Disc. I would not recommend getting into this stock at current levels.