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UBS Investment Research
Monnet Ispat
PAT up YY, below our estimates
Q2FY11 Revenue up 15% YY, PAT up 2% YY
Revenues declined QQ due to lower Power realizations and decline in Sponge Iron
volumes due to maintenance shutdown.
MISP on track to achieve our PAT estimate
MISP has already achieved more than half of our PAT estimate of Rs2.64bn for
FY11E. MISP reported PAT of Rs1.38bn during H1FY11. The PAT will be
boosted in Q4FY11E with commissioning of the 80MW power plant in Raigarh.
Thesis is intact – project execution remains on track
We believe the project executions are on track at Raigarh, Raipur and also at Angul
district in Orissa.
Valuation
We maintain a Buy rating on the stock and Rs730 price target. We continue to
value the power business at 7x EV/EBITDA, the steel 5.5x EV/EBITDA on
FY12E financials, and the equity invested in its un-commissioned power plant at
2.2x P/BV.
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