Buy Adhunik Metaliks; target of Rs 93: Motilal Oswal

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Buy Adhunik Metaliks; target of Rs 93: Motilal Oswal

Motilal Oswal is bullish on Adhunik Metaliks and has recommended buy rating on the stock with a target of Rs 93 in its February 15, 2012 research report.

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Motilal Oswal is bullish on Adhunik Metaliks and has recommended buy rating on the stock with a target of Rs 93 in its February 15, 2012 research report.

"Adhunik Metaliks' (ADML) 3QFY12 results were below expectations with the company reporting consolidated EBITDA of INR1.2b, below our estimate of INR1.35b. Consolidated adjusted PAT at INR290m was boosted by the recognition of deferred tax assets of INR156m. Reported consolidated PAT of INR231m contained extraordinary loss of INR58m as the company disposed off its subsidiary Adhunik Power & Transmission Ltd. Orissa Manganese & Minerals' (OMM) EBITDA increased 26% QoQ to INR528m (down 27% YoY); while adjusted PAT increased 111% QoQ (down 53% YoY) due to higher margins in the recently-commissioned pellet plant and sale of beneficiated ore. Manganese volumes remained affected on dispatch approvals constraints in Orissa due to ongoing Shah Commission inquiry in the state. Suleipat Iron Ore Mine, a 50:50 JV between OMM and Dagara Mines, started production in December 2011. The mine is expected to produce 0.1m tons of iron ore in 4QFY12."

"ADML's standalone net sales grew 9% QoQ to INR3.8b on higher steel realizations and increased metallic sales. However, steel sales volumes continue to remain low and increased by only 2% QoQ (down 11% YoY) to 74kt amid sluggish demand. The stock is trading at FY13 P/E of 3.4x, EV/EBITDA of 3.8x and P/BV of 0.6x. Maintain Buy," says Motilal Oswal research report.  

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To read the full report click on the attachment