Jan 24, 2013, 04.28 PM IST
Angel Broking has maintained neutral rating on Bhushan Steel, in its January 22, 2013 research report.
Angel Broking has maintained neutral rating on Bhushan Steel , in its January 22, 2013 research report.
“For 3QFY2013, Bhushan Steel (Bhushan) reported a modest growth in top-line; however, its bottom-line declined 20.0% yoy due to higher depreciation and interest costs. We maintain our Neutral view on the stock.”
“During 3QFY2013, Bhushan’s net sales grew by 3.8% yoy to Rs2,405cr mainly on account of higher volumes, which however were partially offset by lower realisations. Flat products’ sales volumes increased by 11.6% yoy to 482,949 tonne, while long products’ sales volumes declined by 8.8% yoy to 75,702 tonne in 3QFY2013. However, average gross realizations declined 2.9% yoy to Rs49,034/tonne. EBITDA increased by 8.0% yoy to Rs782cr mainly driven by other operating income which grew by 38.2% yoy to Rs124cr. EBITDA/tonne stood at Rs13,994 in 3QFY2013 compared to Rs14,039 in 3QFY2012. Depreciation expense increased 36.8% yoy to Rs207cr on account of increased capacity. Interest expenses also increased 27.9% yoy to Rs293cr due to increase in debt. Consequently, reported net profit decreased by 20.0% yoy to Rs221cr.”
“We expect Bhushan to complete phase III expansion during 4QFY2013, the benefits of which will be witnessed during FY2014-15. However, we remain concerned over its high leverage (2.6x for FY2013E and 2.3x for FY2014E). Further, at the current market price, the stock is trading at 9.6x FY2013E and 7.3x FY2014E EV/EBITDA, ie at a significant premium over its peers. Hence, we maintain our Neutral view on the stock,” says Angel Broking research report.
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