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M i n i n g a n d e x e c u t i o n h o l d s t h e k e y …
Adhunik Metaliks’ (AML) Q1FY12 consolidated net sales came in at | 463.5
crore (growth of ~8.2% YoY against a decline of ~16% QoQ) as against our
expectation of | 491.2 crore. Sales volumes came in lower than our
estimates but higher realisations aided the topline. The iron and steel
segment contributed ~| 372 crore whereas mining contributed | 120 crore.
The consolidated EBITDA came above our estimate at | 146 crore (I direct
estimate: | 115 crore) registering a dip of ~3.8% YoY and ~10.5% QoQ.
Overall EBITDA margins declined 391 bps YoY and 193 bps QoQ. This was
mainly due to higher raw material costs viz. power, iron ore and coal at the
standalone entity whereas at its subsidiary, expenses relating to the iron
ore beneficiation plant led to lower EBITDA. Consolidated PAT came in at
~| 28.4 crore against our expectation of | 26.5 crore (down ~49.7% YoY
and ~24% QoQ). This was largely due to an increase in the interest cost
and depreciation cost.
ƒ Volumes lower as plant underwent technical upgradation
During the quarter, the company had undertaken technical
upgradation of its mini blast furnace plant to de-bottleneck its capacity
from 2,13,792 tonnes to 2,13,608 tonnes. This has led to lower
production of pig iron, in turn leading to lower sales.
ƒ Project update
During the quarter, the company started trial runs of its 1.2 million
tonne (MT) pellet plant and expects commercial production to start by
September 2011. Also, AML has signed the mining lease for its Kulum
mine and the mine development process is expected to start soon.
On the power business, the implementation of 540 MW is progressing
as per schedule and phase I of 270 MW is expected by March 2012.
V a l u a t i o n
We have valued the stock on an SOTP basis where we have valued AML at
4.4x FY13E EV/EBITDA and OMML at 4.5x FY13E EV/EBITDA. We have
valued the investment in the power business at | 21.3/share where we have
given a 25% holding company discount. We have arrived at a target price of
| 63 and maintained our HOLD rating.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
M i n i n g a n d e x e c u t i o n h o l d s t h e k e y …
Adhunik Metaliks’ (AML) Q1FY12 consolidated net sales came in at | 463.5
crore (growth of ~8.2% YoY against a decline of ~16% QoQ) as against our
expectation of | 491.2 crore. Sales volumes came in lower than our
estimates but higher realisations aided the topline. The iron and steel
segment contributed ~| 372 crore whereas mining contributed | 120 crore.
The consolidated EBITDA came above our estimate at | 146 crore (I direct
estimate: | 115 crore) registering a dip of ~3.8% YoY and ~10.5% QoQ.
Overall EBITDA margins declined 391 bps YoY and 193 bps QoQ. This was
mainly due to higher raw material costs viz. power, iron ore and coal at the
standalone entity whereas at its subsidiary, expenses relating to the iron
ore beneficiation plant led to lower EBITDA. Consolidated PAT came in at
~| 28.4 crore against our expectation of | 26.5 crore (down ~49.7% YoY
and ~24% QoQ). This was largely due to an increase in the interest cost
and depreciation cost.
ƒ Volumes lower as plant underwent technical upgradation
During the quarter, the company had undertaken technical
upgradation of its mini blast furnace plant to de-bottleneck its capacity
from 2,13,792 tonnes to 2,13,608 tonnes. This has led to lower
production of pig iron, in turn leading to lower sales.
ƒ Project update
During the quarter, the company started trial runs of its 1.2 million
tonne (MT) pellet plant and expects commercial production to start by
September 2011. Also, AML has signed the mining lease for its Kulum
mine and the mine development process is expected to start soon.
On the power business, the implementation of 540 MW is progressing
as per schedule and phase I of 270 MW is expected by March 2012.
V a l u a t i o n
We have valued the stock on an SOTP basis where we have valued AML at
4.4x FY13E EV/EBITDA and OMML at 4.5x FY13E EV/EBITDA. We have
valued the investment in the power business at | 21.3/share where we have
given a 25% holding company discount. We have arrived at a target price of
| 63 and maintained our HOLD rating.
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