Hold Graphite India; target of Rs 100: ICICIdirect.com

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Hold Graphite India; target of Rs 100: ICICIdirect.com

ICICIdirect.com has recommended hold rating on Graphite India with a target of Rs 100, in its May 12, 2011 research report.

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RELATED NEWS Buy Ashoka Buildcon; target of Rs 364: PINC Research Buy Essel Propack; target of Rs 62: SKP Securities Buy Mundra Port; target of Rs 175: KRChoksey ALSO READ See previous views by ICICIdirect.com See what other Experts & Brokerages are saying about Graphite India See messages about Graphite India Graphite India BSE | NSE 01/06/12 Are Mutual Funds betting on Graphite India?

ICICIdirect.com has recommended hold rating on Graphite India with a target of Rs 100, in its May 12, 2011 research report.

"In Q4FY11 Graphite India Ltd (GIL) posted subdued numbers on the back of muted realizations and higher operating cost. However PAT was inline with our estimates on the back of sharp rise in other income (higher by 663% YoY and 354% QoQ) to Rs 16.86 crore. Of the total other income ~ Rs 8 crore was exchange gain, while balance was on account of interest income, etc. Whereas the Sales and EBITDA were below our expectations. The sales for the quarter under review stood at Rs 303.05 crore (decline of 10.5% YoY and 10.2% QoQ), while the EBITDA was at Rs 58.75 crore (decline of 40.1% YoY and 19.7% QoQ)."

"The operating performance during Q4FY11 was adversely impacted due to muted realisations, lower volumes and higher input costs. Deferral of some shipments resulted in lower electrode sales volume in Q4FY11.The EBITDA margins during Q4FY11 stood at 19.4% which was lower by 960 bps YoY and 230 bps QoQ. The ensuing PAT stood at Rs 44.54 crore which was flattish sequentially however reported a decline of 19.9% YoY. During the quarter under review the average capacity utilization levels of the standalone operations stood at 91% as compared to 84% during Q3FY11."

"At the CMP of Rs 96, the stock discounts FY12E EPS by 9.1x and FY12E EV/EBITDA by 5.7x. We expect the company to operate at ~ 65% utilization at its expanded capacity of 98000 tonnes in FY13E. Going forward higher production through EAF route of steel making we expect the company sales to grow at a CAGR of ~18% whereas EBITDA and PAT is expected to grow at a CAGR of ~27.5% and ~16% through FY11 to FY13E. Thus we roll over to FY13E and we value the stock at 30% discount to global average of EV/EBITDA 6.8x subsequently arriving at 4.8x FY13E EV/EBITDA. We assign a HOLD rating to the stock with a target price of Rs 100," says ICICIdirect.com research report.  

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