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Result Reviews – 3QFY2011
Monnet Ispat
For 3QFY2011, Monnet Ispat (MIEL) reported a 6.7% yoy decline in net sales to `347cr
mainly due to a decrease in revenue from the power segment, partially offset by the increase
in the steel segment. The power segment’s sales decreased by 51.8% yoy to `77cr, which we
believe would be mainly due to a decline in average realisations yoy. The steel segment’s
sales increased by 8.8% yoy to `276cr. EBITDA decreased by 1.4% yoy to `111cr, as the rise
in costs was partially offset by increased product prices. EBITDA margin improved by 172bp
yoy to 32.0%. Interest expense declined by 66.5% yoy to `5cr. Consequently, net profit
increased by 3.2% yoy to `70cr.
At the CMP, the stock is trading at 10.3x FY2011E and 8.3x FY2012E EV/EBITDA. We
believe timely execution of MIEL’s steel and power projects can provide a significant upside
from current levels. While the 80MW power capacity expansion will drive the earnings
momentum in the near term, long-term stock performance will be determined by timely
expansion of the company’s 1.5mtpa steel plant and unlocking of value in Monnet Power,
which is implementing the 1,050MW power project. Although we expect to lower our
profitability estimates moderately for FY2012 on account of the rise in raw-material prices,
we continue to maintain our Buy rating on the stock with a Target Price of `687.
PTC India
For 3QFY2011, PTC India (PTC) reported 3.5% yoy growth in net sales to `1,758cr. Growth
in the top line was on account of a 31% improvement in volumes to 5,813mn units.
Operating profit for the quarter stood at `41cr (up 392% yoy) on account of robust growth in
trading volumes and higher trading margins. Net profit rose by 138.9% yoy to `38cr, in line
with our estimates. We maintain our Buy rating on the stock with a Target Price of `137.
Finolex Cables
Finolex Cables reported top-line growth of 21.4% yoy with sales of `513cr (`422cr), which
were slightly below our estimates of `533cr. Net profit increased by 113.1% yoy to `26cr
(`12cr), on the back of high sales and lower exceptional and tax expenses. Lower gross
margins resulted in an 87bp decline in OPM to 10.8% (9.9%), as against our expectation of
10.3%. Exceptional items came in at `7cr, compared to `11cr in 3QFY2010. For
9MFY2011, the figure now stands at `22cr, vis-à-vis `52cr in 9MFY2010. Tax rate for the
quarter was 14.0%. We continue to maintain our Buy view on the stock. We may revise our
numbers post the management call.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Result Reviews – 3QFY2011
Monnet Ispat
For 3QFY2011, Monnet Ispat (MIEL) reported a 6.7% yoy decline in net sales to `347cr
mainly due to a decrease in revenue from the power segment, partially offset by the increase
in the steel segment. The power segment’s sales decreased by 51.8% yoy to `77cr, which we
believe would be mainly due to a decline in average realisations yoy. The steel segment’s
sales increased by 8.8% yoy to `276cr. EBITDA decreased by 1.4% yoy to `111cr, as the rise
in costs was partially offset by increased product prices. EBITDA margin improved by 172bp
yoy to 32.0%. Interest expense declined by 66.5% yoy to `5cr. Consequently, net profit
increased by 3.2% yoy to `70cr.
At the CMP, the stock is trading at 10.3x FY2011E and 8.3x FY2012E EV/EBITDA. We
believe timely execution of MIEL’s steel and power projects can provide a significant upside
from current levels. While the 80MW power capacity expansion will drive the earnings
momentum in the near term, long-term stock performance will be determined by timely
expansion of the company’s 1.5mtpa steel plant and unlocking of value in Monnet Power,
which is implementing the 1,050MW power project. Although we expect to lower our
profitability estimates moderately for FY2012 on account of the rise in raw-material prices,
we continue to maintain our Buy rating on the stock with a Target Price of `687.
PTC India
For 3QFY2011, PTC India (PTC) reported 3.5% yoy growth in net sales to `1,758cr. Growth
in the top line was on account of a 31% improvement in volumes to 5,813mn units.
Operating profit for the quarter stood at `41cr (up 392% yoy) on account of robust growth in
trading volumes and higher trading margins. Net profit rose by 138.9% yoy to `38cr, in line
with our estimates. We maintain our Buy rating on the stock with a Target Price of `137.
Finolex Cables
Finolex Cables reported top-line growth of 21.4% yoy with sales of `513cr (`422cr), which
were slightly below our estimates of `533cr. Net profit increased by 113.1% yoy to `26cr
(`12cr), on the back of high sales and lower exceptional and tax expenses. Lower gross
margins resulted in an 87bp decline in OPM to 10.8% (9.9%), as against our expectation of
10.3%. Exceptional items came in at `7cr, compared to `11cr in 3QFY2010. For
9MFY2011, the figure now stands at `22cr, vis-à-vis `52cr in 9MFY2010. Tax rate for the
quarter was 14.0%. We continue to maintain our Buy view on the stock. We may revise our
numbers post the management call.
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