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Steady Performance
Maharashtra Seamless Ltd (MSL) reported net sales of Rs. 4,785 mn for Q1FY12 vs Rs. 3,994 mn
YoY registering 19.8% growth and net profit of Rs. 716.5 mn as compared to Rs. 100.46 mn YoY,
however last year there was higher other income due to profit on redemption of investments in debt
mutual funds.
Result Highlights
⇒ The company reported Q1FY12 volumes of 58,494 tones vs 52,489 and 27,2387 tones vs
23,932 YoY in the seamless and Electric Resistance Welded (ERW) segment respectively. The
company reported volumes of 68,840 tones in Q4FY11 due to specific 2 to 3 big orders from
customers. We expect volumes of 2,50,000 tones in seamless segment for the entire year.
⇒ EBITDA margin per ton in the seamless category was at Rs 15,786 per ton as compared to Rs.
15,580 per tone last year. The company had achieved impressive EBIDTA margin of Rs. 18,250
per tone in Q4FY11 due to higher realizations in the export market, however which was not sustainable
and we expect margins to be in range of Rs. 15,000 to 15,500 per tone as sustainable
on long term basis. EBITDA margin per ton in the ERW category was at Rs 3,018 per ton vs
6,147 YoY. The margins have decreased due to rise in raw material prices.
⇒ Order book position stands at Rs. 7,080 mn with seamless pipe segment contributing Rs. 5,910
mn and ERW segment Rs. 1,1170 mn.
Foray into solar power segment
The company is foraying into solar power segment. The company will invest over Rs. 1.2bn over
FY12 in a solar farm in Pokhran, Rajasthan. It has tendered for the EPC portion of solar farm and
has already signed a PPA with NTPC Vidyut Vyapar Nigam Ltd for sale of power at a rate of
INR12.24/unit.
Outlook and Valuation
The company is debt-free and currently has Rs. 6.90 bn of cash with book value of Rs. 369 per
share. Currently there is intense competition in the domestic market especially from Chinese players.
At current price of Rs 363.5 stock is trading at P/E and P/B of 10.5x and 1.0x respectively. We maintain
our HOLD rating with target price of Rs. 405 per share.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Steady Performance
Maharashtra Seamless Ltd (MSL) reported net sales of Rs. 4,785 mn for Q1FY12 vs Rs. 3,994 mn
YoY registering 19.8% growth and net profit of Rs. 716.5 mn as compared to Rs. 100.46 mn YoY,
however last year there was higher other income due to profit on redemption of investments in debt
mutual funds.
Result Highlights
⇒ The company reported Q1FY12 volumes of 58,494 tones vs 52,489 and 27,2387 tones vs
23,932 YoY in the seamless and Electric Resistance Welded (ERW) segment respectively. The
company reported volumes of 68,840 tones in Q4FY11 due to specific 2 to 3 big orders from
customers. We expect volumes of 2,50,000 tones in seamless segment for the entire year.
⇒ EBITDA margin per ton in the seamless category was at Rs 15,786 per ton as compared to Rs.
15,580 per tone last year. The company had achieved impressive EBIDTA margin of Rs. 18,250
per tone in Q4FY11 due to higher realizations in the export market, however which was not sustainable
and we expect margins to be in range of Rs. 15,000 to 15,500 per tone as sustainable
on long term basis. EBITDA margin per ton in the ERW category was at Rs 3,018 per ton vs
6,147 YoY. The margins have decreased due to rise in raw material prices.
⇒ Order book position stands at Rs. 7,080 mn with seamless pipe segment contributing Rs. 5,910
mn and ERW segment Rs. 1,1170 mn.
Foray into solar power segment
The company is foraying into solar power segment. The company will invest over Rs. 1.2bn over
FY12 in a solar farm in Pokhran, Rajasthan. It has tendered for the EPC portion of solar farm and
has already signed a PPA with NTPC Vidyut Vyapar Nigam Ltd for sale of power at a rate of
INR12.24/unit.
Outlook and Valuation
The company is debt-free and currently has Rs. 6.90 bn of cash with book value of Rs. 369 per
share. Currently there is intense competition in the domestic market especially from Chinese players.
At current price of Rs 363.5 stock is trading at P/E and P/B of 10.5x and 1.0x respectively. We maintain
our HOLD rating with target price of Rs. 405 per share.
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