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Feb 17, 2012, 06.03 PM IST
CRISIL Research has come out with its report on Maharaja Shree Umaid Mills. The research firm has maintained the valuation grade of 2/5 to the company, in its February 16, 2012 report.
CRISIL Research has come out with its report on Maharaja Shree Umaid Mills . The research firm has maintained the valuation grade of 2/5 to the company, in its February 16, 2012 report.
Maharaja Shree Umaid Mills Ltd’s (MSUM’s) Q3FY12 revenues and operating profitability were in line with CRISIL Research’s expectations. The company reported q-o-q revenue growth of 6.6% primarily backed by pick-up in volumes. Exhaustion of high-cost cotton inventory and fall in cotton prices since May 2011 enabled MSUM to turn profitable at the EBITDA level in Q3FY12. Net profit exceeded our expectations due to higher other income. In this quarter, the company has received Rs 3.9 bn cash (net of taxes and payment of Rs 7 mn towards court settlement concerning the Kota land) from the profit on the sale of 21.65% stake in Andhra Pradesh Paper Mills Ltd. We will revise our estimates post our interaction with the management. Given MSUM’s concentrated product profile and vulnerability to fluctuating cotton prices, we maintain the fundamental grade of 2/5.
Q3FY12 result analysis
• The company reported EBITDA margin of 3.8% in Q3FY12, a significant improvement from a loss of Rs 47 mn at the EBITDA level in the previous quarter. Fresh inventories of low-cost cotton resulted in raw material expenses as a proportion of revenues dropping to 75% in Q3FY12 from 83% in the previous quarter.
• Adjusting for the extraordinary income of Rs 3.9 bn, it reported PAT of Rs 93 mn backed by healthy other income of Rs 88 mn in Q3FY12.
• The company has altered its MoA to include the following objectives: a) to deal in any kind of power or electrical energy, b) carry on business of real estate or construction and c) provide necessary infrastructure to harvest and develop forest-based resources. This may be an indication of the possible areas for utilisation of surplus cash available with the company.
Valuations: Current market price has strong upside
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May 25 2013, 16:36
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