Godawari Power & Ispat Ltd. (GPIL)|Q2FY15 First Cut Analysis | Inline estimate; Maintain buy with target price of Rs. 198 :: India Nivesh

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GPIL reported Q2FY15 number was a mixed bag. Revenue increased by 30.7% YoY
and 6.6% QoQ to Rs. 6.3 bn ahead of our expectation of Rs. 5.8 bn due to
resumption of production in subsidiary Ardent steel and higher pellet sales.
However, EBITDA margin stood at 14.2% (up 72 bps YoY), below our expectation
of 17% due to higher raw material cost and lower realization from Iron & steel
business. Consolidated Q2FY15 Adj. PAT (excluding exceptional item of Rs. 25 mn
from long term capital gain) increased 62% YoY to Rs. 132 mn (v/s our expectation
of Rs. 130 mn) due to higher top line .
Inline estimate; Maintain BUY with target price of Rs. 198
On steel front, revenue increased by 23.3% YoY and 9% QoQ due to resumption of
production in subsidiary Ardent steel and revival in domestic demand. With the
new pellet plant in Raipur (1.2mtpa), the total pellet capacity of the company has
increased to 1.8mt. We believe resumption of production from Ardent steel would
further add to volume growth of the company. Power segment also performed well
and top line increased by 61.5% YoY.


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