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S t e a d y p e r f o r m a n c e b ut c o n c e r n s p e r s i s t
Man Industries reported its Q3FY11 numbers better than our estimates.
The topline was at | 439 crore (flat YoY and ~5% QoQ) as against our
expectation of | 382 crore. Flattish growth was mainly attributable to
lower blended realisations (down ~25% YoY) despite strong volume
growth (~25% YoY). Blended realisations in Q3FY11 were |
53874/tonne against | 70473/tonne in the similar period last quarter.
The raw material cost in Q3FY11 has increased ~19% YoY and ~7%
QoQ, mainly due to increase in steel prices, thus taking away the sheen
from an otherwise good performance. Lower realisations and higher
input cost have led to erosion in EBITDA margin by 336 bps YoY.
However, sequentially margins were marginally down ~9.6 bps. Net
profit of the company declined ~17% YoY with marginal growth of
~1% QoQ partially due to unrealised forex gains of | 49.69 crore.
Interest cost of the company has steeply declined by 32% YoY due to
better management of working capital. However, this has not led to an
improvement in bottomline due to higher cost of raw materials that
dented the overall profitability. We remain concerned on the order book
growth and execution. However, a slow uptick in the order book is a
concern in the piping industry. Thus, we have maintained our REDUCE
rating with a target price at | 57.
ƒ Slow up-tick in order book
The order book of the company at the end of Q3FY11 stands at |
1500 crore. This gives us visibility for the next 12-15 months. The
order book of the company has declined as compared to | 2000
crore as on September 30, 2010. The company has bid for various
projects and is expecting to obtain new orders in the next few
months.
V a l u a t i o n
At the CMP of | 60, the stock is trading at 4.7x FY12E EPS of | 12.8.
Despite a stable order book position, concerns remain on the margin and
execution front. We would like to remain cautious at this point of time.
We have valued the stock at 4.5x FY12E EPS to arrive at a target price of |
57 per share and assigned a REDUCE rating to the stock.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
S t e a d y p e r f o r m a n c e b ut c o n c e r n s p e r s i s t
Man Industries reported its Q3FY11 numbers better than our estimates.
The topline was at | 439 crore (flat YoY and ~5% QoQ) as against our
expectation of | 382 crore. Flattish growth was mainly attributable to
lower blended realisations (down ~25% YoY) despite strong volume
growth (~25% YoY). Blended realisations in Q3FY11 were |
53874/tonne against | 70473/tonne in the similar period last quarter.
The raw material cost in Q3FY11 has increased ~19% YoY and ~7%
QoQ, mainly due to increase in steel prices, thus taking away the sheen
from an otherwise good performance. Lower realisations and higher
input cost have led to erosion in EBITDA margin by 336 bps YoY.
However, sequentially margins were marginally down ~9.6 bps. Net
profit of the company declined ~17% YoY with marginal growth of
~1% QoQ partially due to unrealised forex gains of | 49.69 crore.
Interest cost of the company has steeply declined by 32% YoY due to
better management of working capital. However, this has not led to an
improvement in bottomline due to higher cost of raw materials that
dented the overall profitability. We remain concerned on the order book
growth and execution. However, a slow uptick in the order book is a
concern in the piping industry. Thus, we have maintained our REDUCE
rating with a target price at | 57.
ƒ Slow up-tick in order book
The order book of the company at the end of Q3FY11 stands at |
1500 crore. This gives us visibility for the next 12-15 months. The
order book of the company has declined as compared to | 2000
crore as on September 30, 2010. The company has bid for various
projects and is expecting to obtain new orders in the next few
months.
V a l u a t i o n
At the CMP of | 60, the stock is trading at 4.7x FY12E EPS of | 12.8.
Despite a stable order book position, concerns remain on the margin and
execution front. We would like to remain cautious at this point of time.
We have valued the stock at 4.5x FY12E EPS to arrive at a target price of |
57 per share and assigned a REDUCE rating to the stock.
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