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Pipes
Healthy topline growth but higher costs impact EBITDA margins
We expect the topline for the I-direct coverage universe to increase
15.7% YoY to | 5042.2 crore, primarily on the back of higher
volumes and improved realisations. However, the EBITDA margins
are expected to decrease 190 bps YoY to 17% on the back of higher
raw material costs. As a result, the EBITDA for the I-direct coverage
universe is expected to increase 4.3% YoY to | 864.5 crore.
Order book – rising sequentially
Rising crude oil prices and an increase seen in rig counts augurs
well for pipes companies. After remaining muted for the last couple
of quarters, there has been a sequential improvement in the order
book position of pipes companies in the current quarter. Welspun
Gujarat’s order book has increased from | 5000 crore during the end
of Q3FY11 to | 6153 crore during the end of Q4FY11. Due to a pickup
in the North American pipeline projects and renewed activity in
the Middle East region, the export market is likely to remain strong
in terms of demand. Even on the domestic front, demand from
major oil & gas majors is expected to stay.
Company specific view
Company Remarks
Jindal Saw Net sales are expected to marginally grow ~6.2%. Volumes are expected to improve
5% QoQ to 218,125 tonne. EBITDA is expected to grow 17.8% QoQ but decline
~10% YoY. The OPM is expected to improve to ~22% QoQ and YoY (up ~100 bps)
Maharashtra
Seamless
We expected MSL to post healthy topline growth of ~15% YoY. Overall volumes are
expected at ~81,285 tonnes, lower than Q4FY10 mainly driven by higher
realisations of ~$1180/tonne. Sequentially, the EBITDA margin has improved by 150
bps but YoY it is stable
Man
Industries
The company will post flattish growth in the topline. We expect volumes at
~80,000 tonne, a decline of 30% YoY. EBITDA margins are expected to remain
stable at ~12%
PSL Ltd. We expect the topline to dip by 7.8% in Q4FY11. However, on the EBITDA front, the
company is expected to post robust growth of 40% YoY. This is mainly on account of
high margin orders in Q4FY11 as compared to Q4FY10. This will also lead to
improvement in PAT by ~11% YoY
Welspun
Gujarat
The company is expected to post strong growth of 40% YoY on the back of higher
realisations and improved volumes. Welspun is likely to report an EBITDA/tonne of
~| 10500, thus leading to growth in EBITDA by 7.2%
Source: Company , ICICIdirect.com Research
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Pipes
Healthy topline growth but higher costs impact EBITDA margins
We expect the topline for the I-direct coverage universe to increase
15.7% YoY to | 5042.2 crore, primarily on the back of higher
volumes and improved realisations. However, the EBITDA margins
are expected to decrease 190 bps YoY to 17% on the back of higher
raw material costs. As a result, the EBITDA for the I-direct coverage
universe is expected to increase 4.3% YoY to | 864.5 crore.
Order book – rising sequentially
Rising crude oil prices and an increase seen in rig counts augurs
well for pipes companies. After remaining muted for the last couple
of quarters, there has been a sequential improvement in the order
book position of pipes companies in the current quarter. Welspun
Gujarat’s order book has increased from | 5000 crore during the end
of Q3FY11 to | 6153 crore during the end of Q4FY11. Due to a pickup
in the North American pipeline projects and renewed activity in
the Middle East region, the export market is likely to remain strong
in terms of demand. Even on the domestic front, demand from
major oil & gas majors is expected to stay.
Company specific view
Company Remarks
Jindal Saw Net sales are expected to marginally grow ~6.2%. Volumes are expected to improve
5% QoQ to 218,125 tonne. EBITDA is expected to grow 17.8% QoQ but decline
~10% YoY. The OPM is expected to improve to ~22% QoQ and YoY (up ~100 bps)
Maharashtra
Seamless
We expected MSL to post healthy topline growth of ~15% YoY. Overall volumes are
expected at ~81,285 tonnes, lower than Q4FY10 mainly driven by higher
realisations of ~$1180/tonne. Sequentially, the EBITDA margin has improved by 150
bps but YoY it is stable
Man
Industries
The company will post flattish growth in the topline. We expect volumes at
~80,000 tonne, a decline of 30% YoY. EBITDA margins are expected to remain
stable at ~12%
PSL Ltd. We expect the topline to dip by 7.8% in Q4FY11. However, on the EBITDA front, the
company is expected to post robust growth of 40% YoY. This is mainly on account of
high margin orders in Q4FY11 as compared to Q4FY10. This will also lead to
improvement in PAT by ~11% YoY
Welspun
Gujarat
The company is expected to post strong growth of 40% YoY on the back of higher
realisations and improved volumes. Welspun is likely to report an EBITDA/tonne of
~| 10500, thus leading to growth in EBITDA by 7.2%
Source: Company , ICICIdirect.com Research
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