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M a r g i n s t a k e a h i t …
Maharashtra Seamless (MSL) reported a mixed set of numbers in
Q3FY12. While the topline came above our expectation, the EBITDA and
EBITDA margin came below our expectation. The topline came at | 617.5
crore (our estimate: | 554.5 crore), which was 52.2% higher YoY and
6.9% higher QoQ. However, on the back of higher input costs, the
EBITDA margin declined 300 bps QoQ to 16.6% (our estimate: 20.3%).
The subsequent EBITDA stood at | 102.7 crore (our estimate: | 112.5
crore), which was 9.2% lower QoQ and 1.7% YoY. The ensuing reported
PAT stood at | 81.0 crore (our estimate | 76.3 crore), which was flattish
QoQ and 7% higher YoY.
ƒ Higher operating costs lead to decline in EBITDA/tonne
Higher raw material costs have led to a decline in EBITDA/tonne of
seamless pipes QoQ. The EBITDA/tonne of seamless pipes stood at
| 12232/tonne (| 14322/tonne in Q2FY12). However, the
EBITDA/tonne of ERW pipes increased sequentially and stood at
| 4467/tonne in Q3FY12 (| 2860/tonne in Q2FY12).
ƒ Order book remains flat sequentially
The order book of the company has remained flat sequentially at
| 551 crore at the end of Q3FY12 (| 556 crore at the end of Q2FY12).
The export to domestic mix stood at 53:47 (in Q2FY12 it was 60:40).
V a l u a t i o n
At the CMP of | 354, the stock is discounting its FY12E and FY13E
EV/EBITDA by 4.6x and 4.1x, respectively. Going forward, we expect
operating margins to stay muted on the back of higher operating costs.
We maintain our HOLD rating on the stock with a target price of
| 346/share, valuing it at 4x FY13E EV/EBITDA.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
CLICK here for PDF post link
M a r g i n s t a k e a h i t …
Maharashtra Seamless (MSL) reported a mixed set of numbers in
Q3FY12. While the topline came above our expectation, the EBITDA and
EBITDA margin came below our expectation. The topline came at | 617.5
crore (our estimate: | 554.5 crore), which was 52.2% higher YoY and
6.9% higher QoQ. However, on the back of higher input costs, the
EBITDA margin declined 300 bps QoQ to 16.6% (our estimate: 20.3%).
The subsequent EBITDA stood at | 102.7 crore (our estimate: | 112.5
crore), which was 9.2% lower QoQ and 1.7% YoY. The ensuing reported
PAT stood at | 81.0 crore (our estimate | 76.3 crore), which was flattish
QoQ and 7% higher YoY.
ƒ Higher operating costs lead to decline in EBITDA/tonne
Higher raw material costs have led to a decline in EBITDA/tonne of
seamless pipes QoQ. The EBITDA/tonne of seamless pipes stood at
| 12232/tonne (| 14322/tonne in Q2FY12). However, the
EBITDA/tonne of ERW pipes increased sequentially and stood at
| 4467/tonne in Q3FY12 (| 2860/tonne in Q2FY12).
ƒ Order book remains flat sequentially
The order book of the company has remained flat sequentially at
| 551 crore at the end of Q3FY12 (| 556 crore at the end of Q2FY12).
The export to domestic mix stood at 53:47 (in Q2FY12 it was 60:40).
V a l u a t i o n
At the CMP of | 354, the stock is discounting its FY12E and FY13E
EV/EBITDA by 4.6x and 4.1x, respectively. Going forward, we expect
operating margins to stay muted on the back of higher operating costs.
We maintain our HOLD rating on the stock with a target price of
| 346/share, valuing it at 4x FY13E EV/EBITDA.
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