Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
D i s a p p o i n t i n g p e r f o r m a n c e …
Usha Martin’s (UML) performance in Q3FY12 was significantly below our
expectations on the back of higher operating costs. The topline came at
| 817.5 crore (our estimate: | 840.8 crore), which was 9.6% higher YoY
but lower by 1.3% QoQ. However, on the back of higher input costs, the
EBITDA margin declined 950 bps QoQ and 640 bps YoY to 9.4%. Higher
cost of coke coupled with coal purchases from the market at higher rates
(due to non-availability of linkage coal) led to a sharp decline in the
EBITDA margin. The subsequent EBITDA stood at | 77.2 crore (our
estimate: | 128.7 crore). However, reported PAT increased ~96% YoY to
| 25.7 crore on reversal of | 90.1 crore forex losses. For the period under
review, the consolidated adjusted net loss at PAT level was at ~| 35
crore.
ƒ EBITDA margin halves on a QoQ basis
UML’s performance during the quarter under review was impacted
by higher input costs. As a result, the EBITDA margin halved, on a
QoQ basis, to 9.4%. Sequentially at the EBITDA level, higher coke
prices had a negative impact of | 31 crore. In Q3FY12, on account of
non-availability of linkage coal and lower production from captive
mines, the company had to buy coal through the e-auction route. As
a result, there was a negative impact of ~| 15 crore at the EBITDA
level (on a QoQ basis). However, at the EBITDA level, there was a
positive impact of ~| 16 crore QoQ due to higher realisation and a
better product mix.
V a l u a t i o n
At the CMP of | 31, the stock is discounting FY13E EV/EBITDA by 5.1x
and P/E by 8.8x. Going forward, we believe the EBITDA margin would be
under pressure on the back of higher raw material costs and muted
demand. Hence, we believe the company’s performance would remain
subdued over the next few quarters. We have valued the stock at a 10%
discount to domestic blue chip companies, arriving at an EV/EBITDA
multiple of 5x and target price of | 29and assigned a HOLD rating
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
D i s a p p o i n t i n g p e r f o r m a n c e …
Usha Martin’s (UML) performance in Q3FY12 was significantly below our
expectations on the back of higher operating costs. The topline came at
| 817.5 crore (our estimate: | 840.8 crore), which was 9.6% higher YoY
but lower by 1.3% QoQ. However, on the back of higher input costs, the
EBITDA margin declined 950 bps QoQ and 640 bps YoY to 9.4%. Higher
cost of coke coupled with coal purchases from the market at higher rates
(due to non-availability of linkage coal) led to a sharp decline in the
EBITDA margin. The subsequent EBITDA stood at | 77.2 crore (our
estimate: | 128.7 crore). However, reported PAT increased ~96% YoY to
| 25.7 crore on reversal of | 90.1 crore forex losses. For the period under
review, the consolidated adjusted net loss at PAT level was at ~| 35
crore.
ƒ EBITDA margin halves on a QoQ basis
UML’s performance during the quarter under review was impacted
by higher input costs. As a result, the EBITDA margin halved, on a
QoQ basis, to 9.4%. Sequentially at the EBITDA level, higher coke
prices had a negative impact of | 31 crore. In Q3FY12, on account of
non-availability of linkage coal and lower production from captive
mines, the company had to buy coal through the e-auction route. As
a result, there was a negative impact of ~| 15 crore at the EBITDA
level (on a QoQ basis). However, at the EBITDA level, there was a
positive impact of ~| 16 crore QoQ due to higher realisation and a
better product mix.
V a l u a t i o n
At the CMP of | 31, the stock is discounting FY13E EV/EBITDA by 5.1x
and P/E by 8.8x. Going forward, we believe the EBITDA margin would be
under pressure on the back of higher raw material costs and muted
demand. Hence, we believe the company’s performance would remain
subdued over the next few quarters. We have valued the stock at a 10%
discount to domestic blue chip companies, arriving at an EV/EBITDA
multiple of 5x and target price of | 29and assigned a HOLD rating
No comments:
Post a Comment