Ballarpur Industries Margins disappoint, reduce estimates :Emkay,

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Ballarpur Industries

Margins disappoint, reduce estimates

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CMP: Rs30                                        Target Price: Rs35

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n     Q1FY12 results disappointed due to margin pressures. Revenues of Rs 11.1bn, +9% yoy were in line however APAT of Rs 254mn, -38% yoy disappointed due to lower margins

n     Paper realizations increased by 11% yoy/ 3% qoq to Rs 45,000/mt however inventory builtup of 9,000mt impacted sales volumes at 195,800 mt, flat yoy / -5.7% qoq

n     Pulp realizations declined from their peak of Rs 67,700 / mt in Q4FY11 to Rs 56,000/mt in line with estimates. Pulp reported margins of 29.5%

n     We have reduced our FY12 est by 24% to Rs 3.1 due to current margin pressure while expect margins to improve from Q3FY12 on commissioning of pulp plant