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RATING...............................................................................................................Unchanged
C o a l s e g m e n t t o d r i v e g r o w t h…
Mercator Lines Ltd (MLL) reported an improved QoQ performance with a
net profit of | 14 crore in Q1FY12 against a loss of | 67 crore in Q4FY11.
The results were in line with our expectation with MLL reporting revenue
of | 799 crore against our expectation of | 802 crore. MLL had incurred a
loss in Q4FY11 on account of loss on sale of jack-up rig. In the absence of
any extraordinary loss, MLL reported a net profit of | 14 crore, which was
lower than our expectation of | 21 crore. The lower than expected
bottomline was mainly on account of lower EBITDA margin for Q1FY12,
which stood at 18.9%, against our expectation of 20.1%. Going ahead,
the company plans to ramp up the coal trading/mining business and
increase its presence in the dredging business. MLL increased its
presence in Indonesia by adding another mine to its existing two mines.
Production from the new mine is expected to start in Q4FY12 and is
expected to operate at a peak capacity of 3 MTPA. Despite continued
underperformance of the shipping business, MLL is well placed to ride
the volatility due to a major shift in the business model towards the coal
mining and trading business. We expect the contribution to revenues
from the coal segment to increase from 49% in FY11 to 62% in FY13E
reducing the impact of volatility in revenues due to uncertainty in the
shipping segment.
ƒ Improved operating performance
MLL reported a 2.4% QoQ rise in topline at | 799.2 crore in Q1FY12. The
EBITDA and EBITDA margin both reported an increase to | 151.3 crore
and 18.9%, respectively. Improvement in EBITDA and absence of
extraordinary loss has enabled MLL to report a profit of | 14.7 crore in
Q1FY12 as against a loss of | 67.9 crore in Q4FY11.
V a l u a t i o n
At the CMP of | 25, the stock is trading at 3.3x FY13E EPS of | 8.2 and
0.25x FY13E book value of | 100. We have valued the stock at 0.4x FY13E
book value to arrive at a price target of | 40 and recommend a BUY
rating. Existing investors can also purchase additional shares of MLL.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
RATING...............................................................................................................Unchanged
C o a l s e g m e n t t o d r i v e g r o w t h…
Mercator Lines Ltd (MLL) reported an improved QoQ performance with a
net profit of | 14 crore in Q1FY12 against a loss of | 67 crore in Q4FY11.
The results were in line with our expectation with MLL reporting revenue
of | 799 crore against our expectation of | 802 crore. MLL had incurred a
loss in Q4FY11 on account of loss on sale of jack-up rig. In the absence of
any extraordinary loss, MLL reported a net profit of | 14 crore, which was
lower than our expectation of | 21 crore. The lower than expected
bottomline was mainly on account of lower EBITDA margin for Q1FY12,
which stood at 18.9%, against our expectation of 20.1%. Going ahead,
the company plans to ramp up the coal trading/mining business and
increase its presence in the dredging business. MLL increased its
presence in Indonesia by adding another mine to its existing two mines.
Production from the new mine is expected to start in Q4FY12 and is
expected to operate at a peak capacity of 3 MTPA. Despite continued
underperformance of the shipping business, MLL is well placed to ride
the volatility due to a major shift in the business model towards the coal
mining and trading business. We expect the contribution to revenues
from the coal segment to increase from 49% in FY11 to 62% in FY13E
reducing the impact of volatility in revenues due to uncertainty in the
shipping segment.
ƒ Improved operating performance
MLL reported a 2.4% QoQ rise in topline at | 799.2 crore in Q1FY12. The
EBITDA and EBITDA margin both reported an increase to | 151.3 crore
and 18.9%, respectively. Improvement in EBITDA and absence of
extraordinary loss has enabled MLL to report a profit of | 14.7 crore in
Q1FY12 as against a loss of | 67.9 crore in Q4FY11.
V a l u a t i o n
At the CMP of | 25, the stock is trading at 3.3x FY13E EPS of | 8.2 and
0.25x FY13E book value of | 100. We have valued the stock at 0.4x FY13E
book value to arrive at a price target of | 40 and recommend a BUY
rating. Existing investors can also purchase additional shares of MLL.
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