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S t r o n g q u a r t e r …
Visa Steel’s Q4FY11 numbers came above our estimates with net sales
coming in at | 429.7 core (up ~5.5% YoY and ~27.7% QoQ) as against
our expectation of ~| 299.5 crore. The performance of the company has
improved in Q4 as it was able to sell more due to higher production and
improved realisations. The EBITDA of the company came in at | 69.4
crore (I-direct estimate: | 38.6 crore) flattish YoY (up ~0.4%) whereas
sequentially it witnessed a sharp jump of ~91%. Net profit of the
company was higher ~40% YoY and ~123% QoQ at | 23.1 crore (I-direct
estimate: | 10.4 crore). A decline in interest cost (down ~30.2%YoY and
~3% QoQ) and stable depreciation (marginal jump of ~2% YoY and
decline of ~1% QoQ) led to strong profit growth. In March 2011, the
company commissioned its 0.5 MTPA steel melting shop (SMS) and its
rolling mill of 0.5 MTPA is currently under trial runs, which is expected to
start its commercial production by Q2FY12.
ƒ Sequential improvement in sales volumes and realisations
The sales volumes and realisations for Q4FY11 improved across all
segments. Coke volumes improved ~65% QoQ and ~31% YoY
whereas its realisations improved to | 22399/tonne i.e. up ~14%
QoQ and ~37% YoY. Ferro alloys also witnessed robust growth of
~81% sequentially whereas on a YoY comparison it posted a
marginal decline of ~5%. Its other segments like sponge iron and
pig iron also posted healthy volume and realisations growth.
V a l u a t i o n
We believe, going forward, the performance of the company is set to
improve. With the commencement of its rolling mill the company will
primarily consume metallics internally for making value-added products.
Thus, the high sales of value added products will help it to generate better
realisation and margins. At the CMP of | 60, the stock is discounting
FY12E and FY13E EV/EBITDA of 5.4x and 4.6x and P/E by 8.7x and 7.1x,
respectively. We have rolled over our valuation to FY13E and given a 15%
discount to 5.5 EV/EBITDA multiple that we have assigned to large steel
stocks. Thus, we have arrived at our multiple of 4.675x giving us a target
price of | 63. We maintain our HOLD rating on the stock.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
S t r o n g q u a r t e r …
Visa Steel’s Q4FY11 numbers came above our estimates with net sales
coming in at | 429.7 core (up ~5.5% YoY and ~27.7% QoQ) as against
our expectation of ~| 299.5 crore. The performance of the company has
improved in Q4 as it was able to sell more due to higher production and
improved realisations. The EBITDA of the company came in at | 69.4
crore (I-direct estimate: | 38.6 crore) flattish YoY (up ~0.4%) whereas
sequentially it witnessed a sharp jump of ~91%. Net profit of the
company was higher ~40% YoY and ~123% QoQ at | 23.1 crore (I-direct
estimate: | 10.4 crore). A decline in interest cost (down ~30.2%YoY and
~3% QoQ) and stable depreciation (marginal jump of ~2% YoY and
decline of ~1% QoQ) led to strong profit growth. In March 2011, the
company commissioned its 0.5 MTPA steel melting shop (SMS) and its
rolling mill of 0.5 MTPA is currently under trial runs, which is expected to
start its commercial production by Q2FY12.
ƒ Sequential improvement in sales volumes and realisations
The sales volumes and realisations for Q4FY11 improved across all
segments. Coke volumes improved ~65% QoQ and ~31% YoY
whereas its realisations improved to | 22399/tonne i.e. up ~14%
QoQ and ~37% YoY. Ferro alloys also witnessed robust growth of
~81% sequentially whereas on a YoY comparison it posted a
marginal decline of ~5%. Its other segments like sponge iron and
pig iron also posted healthy volume and realisations growth.
V a l u a t i o n
We believe, going forward, the performance of the company is set to
improve. With the commencement of its rolling mill the company will
primarily consume metallics internally for making value-added products.
Thus, the high sales of value added products will help it to generate better
realisation and margins. At the CMP of | 60, the stock is discounting
FY12E and FY13E EV/EBITDA of 5.4x and 4.6x and P/E by 8.7x and 7.1x,
respectively. We have rolled over our valuation to FY13E and given a 15%
discount to 5.5 EV/EBITDA multiple that we have assigned to large steel
stocks. Thus, we have arrived at our multiple of 4.675x giving us a target
price of | 63. We maintain our HOLD rating on the stock.
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