Tamilnadu Newsprint Downgrade estimates, maintain BUY:Emkay

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Tamilnadu Newsprint

Downgrade estimates, maintain BUY

BUY

CMP: Rs 127                                       Target Price: Rs 180

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n     Q4FY11 results disappointed due to lower margins. Revenues of Rs 3.5 bn, flat yoy, EBITDA of Rs 743mn, -18% yoy, APAT Rs 196 mn,-66% yoy

n     EBITDA margins at 21.0% (-450 bps yoy / -510 bps qoq) were below estimates due to higher raw material, fuel and other expenses

n     Margin pressure is likely to continue in near future despite increase in paper prices by ~4% in the quarter since pulp and coal prices remain at elevated level

n     Downgrade FY12E estimates by 24% to Rs 18.9. Introduce FY13E estimates (Rs 25.6) and roll over valuations to FY13E with 7xFY13E EPS to Rs 180 (previous Rs 200)