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H i g h e r r a w m a t e r i a l c o s t e r o d e s m a r g i n …
Bajaj Hindusthan (BHL) reported a subdued set of Q4SY11 results. The
company’s topline grew 9.8% YoY to | 1071.1 crore vs. | 975.1 crore in
Q4SY10. Margins took a significant hit by 1155 bps to 5.2% against 16.7%
on the back of a substantial increase in raw material (RM) cost. The RM
cost in Q4SY11 was at 91.4% of net sales compared to 77.2% of net sales
in Q4SY10. Interest cost during the quarter was up ~14% to | 136.4
crore. Hence, backed by a moderate increase in sales, lower EBITDA and
higher interest cost, earnings took a considerable hit with the company
reporting a loss of | 119.8 crore vs. a loss of | 50.3 crore in Q4SY10.
Highlights of the quarter
BHL announced a rights issue for its shareholders on September29, 2011
offering two new shares for an existing share at a price of | 36/share (face
value of | 1 and a premium of | 35). The company raised | 1479.8 crore
by issuing 41.1 crore shares, thereby increasing its share capital to | 63.9
crore. Of the funds raised, | 1145 crore has been utilised to repay its
working capital debt, | 190 crore is held as liquid funds while | 100 crore
is held in fixed deposit receipts.
Segmental performance for quarter
BHL sold 3.57 lakh tonnes (lt) of sugar during the quarter at an average
realisation of | 25.8/kg. Distillery sales stood at 282.4 lakh litres with a
higher average realisation of | 27.7/litre. Power sales realisation was
marginally higher at | 4.2/unit. Hence, the total segment wise sales from
sugar, distillery & co-generation stood at | 453.4 crore, | 33.6 crore and |
22.2 crore, respectively.
V a l u a t i o n
At the CMP, the stock is trading at 16.4x and 14x its FY12E and FY13E
EPS of | 1.8 and | 2.1, respectively. With higher cane prices (state advised
price for UP mills) announced at | 240/quintal and coal supplies for power
still remaining due for the company, we remain cautious on the
company’s performance in the coming quarters. Further, the lingering
debt on the books continues to weigh down earnings led by higher
interest cost. Hence, we maintain our SELL rating on the stock.
Visit http://indiaer.blogspot.com/ for complete details �� ��
H i g h e r r a w m a t e r i a l c o s t e r o d e s m a r g i n …
Bajaj Hindusthan (BHL) reported a subdued set of Q4SY11 results. The
company’s topline grew 9.8% YoY to | 1071.1 crore vs. | 975.1 crore in
Q4SY10. Margins took a significant hit by 1155 bps to 5.2% against 16.7%
on the back of a substantial increase in raw material (RM) cost. The RM
cost in Q4SY11 was at 91.4% of net sales compared to 77.2% of net sales
in Q4SY10. Interest cost during the quarter was up ~14% to | 136.4
crore. Hence, backed by a moderate increase in sales, lower EBITDA and
higher interest cost, earnings took a considerable hit with the company
reporting a loss of | 119.8 crore vs. a loss of | 50.3 crore in Q4SY10.
Highlights of the quarter
BHL announced a rights issue for its shareholders on September29, 2011
offering two new shares for an existing share at a price of | 36/share (face
value of | 1 and a premium of | 35). The company raised | 1479.8 crore
by issuing 41.1 crore shares, thereby increasing its share capital to | 63.9
crore. Of the funds raised, | 1145 crore has been utilised to repay its
working capital debt, | 190 crore is held as liquid funds while | 100 crore
is held in fixed deposit receipts.
Segmental performance for quarter
BHL sold 3.57 lakh tonnes (lt) of sugar during the quarter at an average
realisation of | 25.8/kg. Distillery sales stood at 282.4 lakh litres with a
higher average realisation of | 27.7/litre. Power sales realisation was
marginally higher at | 4.2/unit. Hence, the total segment wise sales from
sugar, distillery & co-generation stood at | 453.4 crore, | 33.6 crore and |
22.2 crore, respectively.
V a l u a t i o n
At the CMP, the stock is trading at 16.4x and 14x its FY12E and FY13E
EPS of | 1.8 and | 2.1, respectively. With higher cane prices (state advised
price for UP mills) announced at | 240/quintal and coal supplies for power
still remaining due for the company, we remain cautious on the
company’s performance in the coming quarters. Further, the lingering
debt on the books continues to weigh down earnings led by higher
interest cost. Hence, we maintain our SELL rating on the stock.
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