CRISIL maintains fair value of Rs 195 to Maithan Alloys

516 Investors following Maithan Alloys. Share this News with them.

0

Like this story, share it with millions of investors on M3

CRISIL maintains fair value of Rs 195 to Maithan Alloys

CRISIL Research has come out with its report on Maithan Alloys. The research firm has maintained the fundamental grade of 3/5 to the company in its February 7, 2012 report.

Post your opinion here

 

0

Tweet

Share on Tumblr

Maithan Alloys BSE | NSE 31/05/12 Are Mutual Funds betting on Maithan Alloys?

CRISIL Research has come out with its report on Maithan Alloys . The research firm has maintained the fundamental grade of 3/5 to the company in its February 7, 2012 report.

Maithan Alloys Ltd's (Maithan's) Q3FY12 revenues were above CRISIL Research's expectations while earnings were slightly below. Increase in trading sales contributed to the strong revenue growth but lowered blended margin. The company commissioned its 120,000 MTPA capacity at Vizag SEZ in January, 2012 - we had expected it in Q3FY12. We may lower our estimates post our interaction with the management. We maintain the fundamental grade of 3/5.

Q3FY12 result analysis (standalone)
• Net sales increased 29% y-o-y (up 31% q-o-q) to Rs 1,904 mn on account of higher trading sales. Trading sales contributed ~27% to gross sales.

• EBITDA margin contracted by 321 bps y-o-y (down 420 bps q-o-q) to 10.2% on account of higher share of low margin trading sales.

• The company has expensed Rs 24.7 mn as a part of the provisional arrear power bill of Rs 98 mn. The bill was raised by Damodar Valley Corporation for the period May 2010 to March 2011, based on final tariff order. So far, the company has expensed Rs 73 mn and the remaining Rs 25 mn will be expensed in Q4FY12.

• The company has reported 12% q-o-q (39% y-o-y) decline in the depreciation expense on account of capital subsidy received from the government. Its depreciation expense was Rs 17 mn as compared to Rs 19 mn in Q2FY12.

• PAT declined by 35% y-o-y and 7% q-o-q to Rs 129 mn, largely in line with operating margins. The company reported higher interest cost of Rs 13 mn as compared to Rs 3 mn in Q2FY12 on account of increase in working capital requirements due to higher sales.

• The company has reported EPS of Rs 8.9 as compared to Rs 11.2 in Q2FY12 and Rs 11.4 in Q3FY11.

Valuations: Current market price has strong upside
Considering the cyclical nature of the business, we continue to use EV/EBITDA method to value Maithan. We arrive at a fair value of Rs 195 per share. At CMP of Rs 105 per share out valuation grade is 5/5.

To read the full report click on the attachment

Disclaimer: This report (Report) has been commissioned by the Company/Investor/Exchange and prepared by CRISIL. The report is based on data publicly available or from sources considered reliable by CRISIL (Data). However, CRISIL does not guarantee the accuracy, adequacy or completeness of the Data / Report and is not responsible for any errors or omissions or for the results obtained from the use of Data / Report. Opinions expressed herein are CRISIL's opinions as on the date of this Report.  The Data / Report are subject to change without any prior notice. Nothing in this Report constitutes investment, legal, accounting or tax advice or any solicitation, whatsoever. The Report is not a recommendation to buy / sell or hold any securities of the Company. CRISIL especially states that it has no financial liability, whatsoever, to the subscribers / users of this Report. This Report is for the personal information of the authorized recipient only. This Report should not be reproduced or redistributed or communicated directly or indirectly in any form to any other person or published or copied in whole or in part especially outside India, for any purpose.

© CRISIL Limited . All Rights Reserved. Published under permission from CRISIL"