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For 2QFY2012, Graphite India’s (GIL) top line came in at `462cr, an increase of
42.5% yoy. EBITDA margin contracted by 970bp yoy to 16.4%. EBITDA declined
by 10.5% yoy to `76cr. PAT declined by 32.4% to `42cr on the back of margin
compression. Going ahead, the scenario is positive for the company, as it has
started steel production again in June 2011 (post the shutdown) and is showing a
strong rising trend. We maintain our Buy recommendation on the stock.
Strong sales growth but margin decline: GIL reported strong sales growth in
2QFY2012. Revenue increased by 42.5% yoy and 44.9% qoq to `462cr. The
graphite and carbon segment posted a 45% yoy increase in revenue to `398cr.
Sequentially also, the increase was very strong, with sales increasing by 46.5% on
the back of strong volume growth. The steel division’s revenue increased by 203%
qoq to `28cr. The company’s OPM declined by 970bp yoy to 16.4% due to
increased raw-material cost and other expenses as a percentage of sales.
Consequently, PAT declined by 32.4% yoy but increased by 13.6% qoq on the
back of higher top line. PAT margin came in at 9.1%, down 250bp qoq and
1,005bp yoy, during the quarter.
Outlook and valuation: We remain positive on the prospects of GIL, owing to
strong demand from steel manufacturers. Realizations are also set to increase, as
global players have hiked their prices recently. Post 2QFY2012, we have tweaked
our numbers slightly, and we expect sales to post a 19.2% CAGR over
FY2011–13E and PAT to witness a 17.7% CAGR over the same period. At the
CMP, the stock is trading at attractive valuations of 0.8x its FY2013E BV,
respectively. We have valued the stock at its five-year median of 1.1x one-year
forward book value to arrive at a target price of `102. We maintain our Buy
recommendation on the stock.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
For 2QFY2012, Graphite India’s (GIL) top line came in at `462cr, an increase of
42.5% yoy. EBITDA margin contracted by 970bp yoy to 16.4%. EBITDA declined
by 10.5% yoy to `76cr. PAT declined by 32.4% to `42cr on the back of margin
compression. Going ahead, the scenario is positive for the company, as it has
started steel production again in June 2011 (post the shutdown) and is showing a
strong rising trend. We maintain our Buy recommendation on the stock.
Strong sales growth but margin decline: GIL reported strong sales growth in
2QFY2012. Revenue increased by 42.5% yoy and 44.9% qoq to `462cr. The
graphite and carbon segment posted a 45% yoy increase in revenue to `398cr.
Sequentially also, the increase was very strong, with sales increasing by 46.5% on
the back of strong volume growth. The steel division’s revenue increased by 203%
qoq to `28cr. The company’s OPM declined by 970bp yoy to 16.4% due to
increased raw-material cost and other expenses as a percentage of sales.
Consequently, PAT declined by 32.4% yoy but increased by 13.6% qoq on the
back of higher top line. PAT margin came in at 9.1%, down 250bp qoq and
1,005bp yoy, during the quarter.
Outlook and valuation: We remain positive on the prospects of GIL, owing to
strong demand from steel manufacturers. Realizations are also set to increase, as
global players have hiked their prices recently. Post 2QFY2012, we have tweaked
our numbers slightly, and we expect sales to post a 19.2% CAGR over
FY2011–13E and PAT to witness a 17.7% CAGR over the same period. At the
CMP, the stock is trading at attractive valuations of 0.8x its FY2013E BV,
respectively. We have valued the stock at its five-year median of 1.1x one-year
forward book value to arrive at a target price of `102. We maintain our Buy
recommendation on the stock.
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