Expect Q4FY18 EBITDA to improve by 30% over Q3; aim to pare debt: Godawari Power

Godawari Power & Ispat posted a good set of third quarter earnings. The stock was also one of our outperformers of 2017.

BL Agrawal, MD, Godawari Power & Ispat in an interview to CNBC-TV18 shared his outlook for the business going forward and also the details of the third quarter performance.

Agrawal is confident that going forward they would be able to increase the EBITDA number by close to 30 percent and pare debt in the next couple of years by Rs 600 crore, Rs 100 crore in this year. EBITDA for Q3 stood at Rs 170 crore, while the long-term debt stood at Rs 1950 crore. At start of FY18 debt was Rs 2000 crore, he said.

He said robust steel prices contributed about 30 percent to the topline growth, while volumes were up 10 percent.

The year on year (YoY) sales in the Q3FY18 were up 58 percent at Rs 672 crore versus Rs 426.56 crore in Q3FY17. The YoY operating profit was up 87 percent at Rs 168.62 crore versus Rs 90 crore in Q3FY17.

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BL Agrawal

MD|Godawari Power & Ispat

The pellet segment was the key contributor to the topline and bottomline, said Agrawal. Going forward too he is extremely bullish on pellet prices and demand and expect production cut in China to keep steel demand strong. Moreover, there will be demand for pellets from China as well.

Currently, the prices of import from China is around 15 percent premium to domestic prices and so there is scope to increase prices domestically, said Agrawal.
The Q4FY18 is expected to be far better than Q3FY18, said Agrawal.

Margins were up 400 basis points at 25.1 percent versus 21.1 percent YoY.
For full interview, watch video