Tamilnadu Newsprint - Inventory builtup hurts revenues BUY ::Emkay

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Tamilnadu Newsprint

Inventory builtup hurts revenues

BUY

CMP: Rs118                                        Target Price: Rs180

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n     Q1FY12 results were below estimates due to lower sales volumes. Lower capacity utilization in new plant and inventory builtup during Q1 hurt sales volumes

n     EBITDA margins declined 420 bps yoy to 26.1% (in line with  est of 26.3%) due to higher raw material, fuel and other expenses

n     Margin pressure is likely to continue in coming quarters due to cost escalation. Volumes to pick up with the stabilization of new plant & inventory clearance in Q2

n     Maintain FY12E/FY13E EPS estimates of Rs 18.9/25.6. Maintain BUY with TP of Rs 180