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Lower Captive Iron Ore Output Contracted Margins:
• Godawari reported stable sequential performance with a PAT of `106 million or EPS of
`3.35 in Q3 FY12. Its net sales grew ~12.2% q-o-q to `4,810 million on the back of
improvement in sales volume and better realizations. Net revenues also benefited from
substantial increase in revenues from trading activity at Hira Ferro Alloy, a 51% subsidiary.
Q3 FY12 results are not comparable on Y-o-Y basis due to completion of corporate
restructuring in FY12.
• Despite robust topline growth Godawari’s Q3 FY12 EBITDA grew only 6.4% to `560
million (margin contracted 63 bps sequentially) due to lower captive iron ore consumption,
which was down ~58% due to extended delay in negotiation of transportation
contract.
• Moderation in EBITDA margin coupled with increase in interest burden and higher minority
interest in net income resulted in flat sequential earnings in Q3 FY12.
• Godawari has not created any provision for MTM losses of `257 million relating to its
foreign currency loans due to volatile currency market. The company plans to make
provision relating to the same at the time of year end.
Outlook & Valuation: Based on better than expected sales volume and realizations, we
revise our FY12 earnings upwards by ~7% to `20.7 for FY12. However, we lower our
FY13 earnings marginally by ~1.6%, which reflects our conservative stand on ramp up in
FY13 captive iron ore output. Based on attractive valuation, we reiterate our BUY rating
and maintain 12 month price target of `146 on the shares of Godawari Power. We expect
resolution on iron ore mining issues will drive near term margins.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Lower Captive Iron Ore Output Contracted Margins:
• Godawari reported stable sequential performance with a PAT of `106 million or EPS of
`3.35 in Q3 FY12. Its net sales grew ~12.2% q-o-q to `4,810 million on the back of
improvement in sales volume and better realizations. Net revenues also benefited from
substantial increase in revenues from trading activity at Hira Ferro Alloy, a 51% subsidiary.
Q3 FY12 results are not comparable on Y-o-Y basis due to completion of corporate
restructuring in FY12.
• Despite robust topline growth Godawari’s Q3 FY12 EBITDA grew only 6.4% to `560
million (margin contracted 63 bps sequentially) due to lower captive iron ore consumption,
which was down ~58% due to extended delay in negotiation of transportation
contract.
• Moderation in EBITDA margin coupled with increase in interest burden and higher minority
interest in net income resulted in flat sequential earnings in Q3 FY12.
• Godawari has not created any provision for MTM losses of `257 million relating to its
foreign currency loans due to volatile currency market. The company plans to make
provision relating to the same at the time of year end.
Outlook & Valuation: Based on better than expected sales volume and realizations, we
revise our FY12 earnings upwards by ~7% to `20.7 for FY12. However, we lower our
FY13 earnings marginally by ~1.6%, which reflects our conservative stand on ramp up in
FY13 captive iron ore output. Based on attractive valuation, we reiterate our BUY rating
and maintain 12 month price target of `146 on the shares of Godawari Power. We expect
resolution on iron ore mining issues will drive near term margins.
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