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Upgrade price target, maintain BUY |
BUY
CMP: Rs 149 Target Price: Rs 200
n Q2FY11 results were in line with estimates with revenues of Rs 3 bn (+10%yoy) and APAT of Rs 408mn (+45%yoy)
n EBITDA margins improved by 70bps to 31.6% driven by 9% increase in realisation
n We upgrade our FY11E/FY12E EPS estimates by 17%/4% on account of higher realisations
n Upgrade price target by 40% based on 8x FY12 EPS. At target price stock trades at FY12 P/BV of 1.3x, EV/EBITDA 5.1x
Revenues increased by 10%, margins improved by 70 bps…
TNPL’s Q2FY11 results were broadly inline with estimates. Revenues increased by 10%
yoy to Rs 3.0 bn driven by 1.2% growth in volumes to 62 thousand mt and 9.1% growth
in average realisations to Rs 44,791 / mt. EBITDA margins improved by 70 bps yoy and
remained at high levels of 31.6% as the company benefited from low cost captive pulp
resulting in EBITDA of Rs 940 mn, +12.2% yoy. EBITDA / mt improved to Rs 15,000 /
mt from Rs 13,330 / mt previous year and Rs 14,110 / mt in Q1FY11.
…Resulting APAT grew by 45%
On account of revenues growth and margin expansion, APAT increased by 45% yoy to
Rs 408 mn which was in line with our estimates of Rs 429 mn. The company reported
EO income of Rs 123 mn (post tax) from sale of fuel and reported PAT of Rs 531 mn
which increased by 88% yoy. AEPS for the quarter stood at Rs 5.9 as against Rs 4.1
previous year.
Revised FY11E/FY12E estimates by 17%/4%
TNPL’s commissioning of paper plant is delayed by one quarter however paper
realisations are higher by ~5% than our previous estimates. Following which, we have
revised our FY11E EPS estimates by 17% to Rs 22.3 (from Rs 19) and FY12E by 4% to
Rs 24.8 (from Rs 23.9).
Upgrade price target by 40%, maintain BUY
Given the strong H1FY11 results, ongoing capex, ability to captively source its pulp
requirement and strong demand outlook for the paper industry, we are revising our
target multiple on the company from earlier 6x to 8x. Simultaneously, we are revising
our FY11E earnings estimates by 17% from earlier Rs 19 to Rs 22.3 and FY12E
earnings estimates by 4% from Rs 23.9 to Rs 24.8. Subsequently, we are upgrading our
target price by 40% from 143 to Rs 200 (based on 8x FY12E EPS) and maintain BUY.
At our target price, the stock trades at P/BV of 1.3x, EV/EBITDA of 5.1x and EV/Sales of
1.8x. Valuations at current market price continue to remain attractive as the stock trades
at PER of 6x FY12E, 1x P/BV, and offers attractive dividend yield of 3.4%.
Revenues increased by 10%, margins improved by 70 bps…
TNPL’s Q2FY11 results were broadly inline with estimates. Revenues increased by 10%
yoy to Rs 3.0 bn driven by 1.2% growth in volumes to 62 thousand mt and 9.1% growth
in average realisations to Rs 44,791 / mt. EBITDA margins improved by 70 bps yoy and
remained at high levels of 31.6% as the company benefited from low cost captive pulp
resulting in EBITDA of Rs 940 mn, +12.2% yoy. EBITDA / mt improved to Rs 15,000 /
mt from Rs 13,330 / mt previous year and Rs 14,110 / mt in Q1FY11.
…Resulting APAT grew by 45%
On account of revenues growth and margin expansion, APAT increased by 45% yoy to
Rs 408 mn which was in line with our estimates of Rs 429 mn. The company reported
EO income of Rs 123 mn (post tax) from sale of fuel and reported PAT of Rs 531 mn
which increased by 88% yoy. AEPS for the quarter stood at Rs 5.9 as against Rs 4.1
previous year.
Revised FY11E/FY12E estimates by 17%/4%
TNPL’s commissioning of paper plant is delayed by one quarter however paper
realisations are higher by ~5% than our previous estimates. Following which, we have
revised our FY11E EPS estimates by 17% to Rs 22.3 (from Rs 19) and FY12E by 4% to
Rs 24.8 (from Rs 23.9).
Upgrade price target by 40%, maintain BUY
Given the strong H1FY11 results, ongoing capex, ability to captively source its pulp
requirement and strong demand outlook for the paper industry, we are revising our
target multiple on the company from earlier 6x to 8x. Simultaneously, we are revising
our FY11E earnings estimates by 17% from earlier Rs 19 to Rs 22.3 and FY12E
earnings estimates by 4% from Rs 23.9 to Rs 24.8. Subsequently, we are upgrading our
target price by 40% from 143 to Rs 200 (based on 8x FY12E EPS) and maintain BUY.
At our target price, the stock trades at P/BV of 1.3x, EV/EBITDA of 5.1x and EV/Sales of
1.8x. Valuations at current market price continue to remain attractive as the stock trades
at PER of 6x FY12E, 1x P/BV, and offers attractive dividend yield of 3.4%.
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