Dolat Capital is bullish on Innoventive Industries and has recommended accumulate rating on the stock with a target of Rs 144 in its February 15, 2013 research report.
“Innoventive Industries, consolidated sales for IIL grew by 13.8 percentYoY/6.9 percentQoQ to Rs 2.17bn (DCe: Rs 2.11bn). Motor vehicle division sales rose by 13.8 percentYoY/6.9 percentQoQ to Rs 465mn. Tubes and products has shown growth of 2.9 percentYoY but fell sequentially 9.6 percentQoQ to Rs 1.14bn. However to our surprise OCTG products sales fell 15.5 percentQoQ to Rs 297mn which were affected by slowdown in US. A cold rolled steel sales rose by 8.6 percentYoY/8.7 percentQoQ to Rs 297mn. EBITDA margins (includes other operating income) were at 25.0 percent (declined by 300bps QoQ). Margins were impacted by higher employee cost as company provided Rs 30mn (Rs 20mn for H1FY13) for increase of salary for certain employees. Interest cost and depreciation cost has increased by 3.1 percentYoY and 58 percentYoY to Rs 171mn and Rs 106.1 mn.”
“Consolidated Net profit fell by 27.1 percentYoY/12.7 percentQoQ to Rs 172mn (DCe: Rs 199mn). IIL currently has a net debt of Rs 4.25bn (excluding Rs 1.5bn of factoring limits). IIL has received VAT subsidy of Rs 70mn during the quarter. IIL expects to complete the expansion of capacity to 78000 tonnes of CEW tubes by Mar-13. IIL continues to highlight the difficult market scenario given the auto slow down in the domestic markets and its volumes degrew in Q3FY13.”
“We have reduced our estimates by and 8 percent in FY14E given the slowdown in its key operating segment like Oil and Gas and power sector. Although near term for IIL remains challenging we are structurally positive on IIL givens its cost leadership in CEW tubes through pilgering process and its focus on innovation to develop new markets for its products. We introduce our FY15E and expect PAT CAGR of 23 percent over FY13E-FY15E. IIL is currently trading at 6.3xFY13EPS and 5.5xFY14 EPS. We change our Rating from Buy rating to Accumulate on the stock with our target price to Rs 144 per share (7x FY14EPS),” says Dolat Capital research report.
FIIs holding more than 30% in Indian cos
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