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PSL’s Q3FY12 standalone revenue at INR5.2bn (down 31.2% YoY, up 2.3%
QoQ) was in line with estimate. EBITDA and PAT dipped to INR0.8bn
(down 6.2% QoQ and 7.0% YoY) and INR0.1bn (down 36.5% QoQ and
67.4% YoY), respectively. The company’s standalone order book stands at
INR29bn with majority orders worth ~INR16bn announced in the last two
months. We have increased our FY13E EPS 6.3% to INR16.2/share to
incorporate higher EBITDA margin (against our earlier expectation).
Maintain ‘BUY’ with a target price of INR140/share (March 2013).
Revenue and EBITDA in line with estimates; pipe sales at 48.6KT
Q3FY12 standalone pipe sales at 48.6KT (down 35.4% YoY and 8.5% QoQ) were
marginally below estimated 50KT. However, revenue increased 2.3% QoQ due to
higher pipe realizations at USD1,117/mt (Q2FY12 realisation USD1,056/mt). Coating
segment recorded EBITDA margin of 12‐13% while pipes EBITDA was ~USD197/mt
(down 9.4% QoQ). Depreciation, interest and tax rate at INR278mn, INR408mn and
30%, respectively, were flat QoQ and in line with estimates. PAT at INR67mn was
lower than expected due to carried down effect of marginally lower EBITDA.
Order book at INR29bn; lower EBITDA margin on new orders
Recent announcement of orders propelled the order book back to a decent INR29bn
(provides visibility over next 3‐4 quarters). However, the EBITDA margin for new
orders seems to be lower at USD130‐150/mt than PSL’s 9mFY12 average of
~USD200/tn. Rising steel price regime leads to negative impact on EBITDA margin.
Management guided for 50‐60KT pipe sales for US facility in FY12; 100KT sales in FY13.
Outlook and valuations: Uptick in order book; maintain ‘BUY’
With no major capex plans for the next 12 months, PSL is likely to repay some portion
of its debt during FY13 (as per management), thereby reducing interest expenses. We
are rolling over our target price to March 2013 and peg the same at INR140/share. At
CMP of INR69/share, the stock trades at 5.6x/4.3x our FY12E/13E EPS. Our price target
estimate is based on average of P/E (7.5x) and EV/EBITDA (5.4x) valuations. We
maintain ‘BUY’ recommendation on the stock
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
PSL’s Q3FY12 standalone revenue at INR5.2bn (down 31.2% YoY, up 2.3%
QoQ) was in line with estimate. EBITDA and PAT dipped to INR0.8bn
(down 6.2% QoQ and 7.0% YoY) and INR0.1bn (down 36.5% QoQ and
67.4% YoY), respectively. The company’s standalone order book stands at
INR29bn with majority orders worth ~INR16bn announced in the last two
months. We have increased our FY13E EPS 6.3% to INR16.2/share to
incorporate higher EBITDA margin (against our earlier expectation).
Maintain ‘BUY’ with a target price of INR140/share (March 2013).
Revenue and EBITDA in line with estimates; pipe sales at 48.6KT
Q3FY12 standalone pipe sales at 48.6KT (down 35.4% YoY and 8.5% QoQ) were
marginally below estimated 50KT. However, revenue increased 2.3% QoQ due to
higher pipe realizations at USD1,117/mt (Q2FY12 realisation USD1,056/mt). Coating
segment recorded EBITDA margin of 12‐13% while pipes EBITDA was ~USD197/mt
(down 9.4% QoQ). Depreciation, interest and tax rate at INR278mn, INR408mn and
30%, respectively, were flat QoQ and in line with estimates. PAT at INR67mn was
lower than expected due to carried down effect of marginally lower EBITDA.
Order book at INR29bn; lower EBITDA margin on new orders
Recent announcement of orders propelled the order book back to a decent INR29bn
(provides visibility over next 3‐4 quarters). However, the EBITDA margin for new
orders seems to be lower at USD130‐150/mt than PSL’s 9mFY12 average of
~USD200/tn. Rising steel price regime leads to negative impact on EBITDA margin.
Management guided for 50‐60KT pipe sales for US facility in FY12; 100KT sales in FY13.
Outlook and valuations: Uptick in order book; maintain ‘BUY’
With no major capex plans for the next 12 months, PSL is likely to repay some portion
of its debt during FY13 (as per management), thereby reducing interest expenses. We
are rolling over our target price to March 2013 and peg the same at INR140/share. At
CMP of INR69/share, the stock trades at 5.6x/4.3x our FY12E/13E EPS. Our price target
estimate is based on average of P/E (7.5x) and EV/EBITDA (5.4x) valuations. We
maintain ‘BUY’ recommendation on the stock
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