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Texmaco BUY
Building momentum Rs162
Reason for report: Q2FY11 results review
Texmaco’s Q2FY11 EBITDA surged a healthy 22% YoY to Rs430mn (I-Sec:
Rs434mn) and PAT rose 31% YoY to Rs294mn (I-Sec: Rs294mn) with booking of
800 wagons (650 wagons from IR and 150 from private orders) for the quarter.
EBITDA margin was comfortable at 17.6%, up 300bps YoY but down 250bps QoQ.
The Heavy Engineering (HE) division led the strong performance with 51% YoY
growth in PBIT to Rs350mn. Though the number of wagons sold was lower at 800
versus 1,021 in Q2FY10, value per wagon was higher. Topline for Foundry
remained tepid, declining 13% QoQ to Rs340mn – the division’s production was
affected due to lower demand of couplers, however traction has been building on
export orders for FY12. The total order book stands at 5,000 wagons (including
1,200 from private). Further orders of 23,000 wagons are expected in Q3FY11. We
maintain BUY with Rs201 target price.
