Ballarpur Industries Q3FY11 Result Update; Margins disappoint, downgrade to Accumulate; Target: Rs 42: Emkay

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Ballarpur Industries

Margins disappoint, downgrade to Accumulate

ACCUMULATE

CMP: Rs 37                                        Target Price: Rs 42

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n     Q3FY11 results disappointed with PAT of Rs 492 mn, +11% yoy, mainly on account of pressure on EBITDA margins

n     Increase in realisations (by 3% in Mar’11 and further 3% from May’11) would help to arrest rise in input (pulp and coal) cost

n     Company’s dependency on market pulp to continue despite increase in pulp capacity and higher pulp prices to keep margins under pressure

n     Downgrade FY11E / FY12E estimates by 12% each. Roll over price target to FY13 estimates (8x Rs 5.2) at Rs 42. Downgrade to Accumulate (from BUY)