Buy GMDC; target of Rs 249: Sushil Finance

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26 Aug, 2025 12:21

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Sushil Finance is bullish on Gujarat Mineral Development Corporation (GMDC) and has recommended buy rating on the stock with a target of Rs 249 in its February 6, 2013 research report.
 
“GMDC, Q3FY13 Revenues de-grew 8% YoY at Rs.3,534 mn led by 15% decline in mining revenues off-set by more than 100% growth in Power revenues. GMDC witnessed de-growth in lignite volumes at 2.48 mn tons vs. 2.78 mn tons in Q3FY12, led by delayed monsoons and low demand from the bricks & ceramics industry due to pending MoEF clearances. The bricks & ceramics industry has now received the requisite MoEF clearances and demand for lignite is back to normal. Despite of dismal performance in Q3FY13, the management is confident to achieve lignite output in excess of 4 mn tons in Q4FY13. Considering 9MFY13 Lignite output, we have lowered our FY13E volumes to 11.8 mn ton. However; we have upward revised our FY14E volumes to 13.2 (12.7) mn tons (management guidance 14.2 mn tons) given that the company received the long pending approval for Umarsar mines which has a reserve base of ~21 mn tons with an annual capacity of 1 mn ton. It expects to start mining operations by April 2013 end.”
 
“The Thermal Power plant turnaround in Q3FY13 with a marginal profit of ~10 mn led by improvement in average PLF at 60% (considering auxiliary consumption) vs. 56% in Q2FY13. Wind & solar division reported loss of ~Rs.30 mn led by seasonality factors; resulting in a net power loss of ~Rs.22 mn. The company is likely to commission its 5th wind power plant with capacity of 50 MW by end of Q4FY13E. KEPCO took over the entire O&M operations of the thermal power plant w.e.f. 1st February 2013 for an annual fixed charge of Rs.330 mn (Incl. taxes) (vs. current ~Rs.480 mn being spent as fixed O&M charges) and has guaranteed an annual PLF of 75%. EBITDA grew by 10% YoY to Rs.1,760 mn with margin improvement of 821 bps to 49.8% (41.6%). Margin improvement was largely driven by turnaround of the thermal division. During the quarter, the company made a one-time provision of ~Rs.204 mn towards deallocation of Naini coal block. Adjusted PAT grew by 12% at Rs.1,260 mn with margins of 35.7% (29.3%). • The company has revised its earlier capex guidance to Rs.7,550 mn (Rs.5,550 mn) to be incurred on setting up wind farm with a capacity of 50 MW (Rs.3,050 mn) to be commissioned by Q4FY13E and land acquisition for future mining projects & Nalco JV. For FY14, the company has guided for a capex of Rs.5,550 mn for setting up an additional 50 MW wind farm taking its total wind capacity to 200MW and land acquisition.”
 
“GMDC has reported decent numbers for Q3FY13. Amidst low volume off-take in the quarter, we are downward revising our earnings estimate for FY13E by 8%. However; we have upward revised our FY14E earnings by 4.3% post factoring in 0.5 mn output from Umarsar mine at a realization of Rs.1,200/ton as against management guidance of over Rs.1,400/ton. We continue to recommend BUY on the stock as we believe the huge discounting (~36% on EV/EBITDA) to coal India is highly unwarranted given that the company has a good pipeline of mine additions which will significantly add volumes in the subsequent years coupled with likely commencement of Alumina JV with Nalco which will significantly add value to the company’s core business. Thus, based on consistent volume growth, strong pricing power, robust cash generation (Rs.9551 mn in FY14E), healthy return ratios and likely improvement in the power business we maintain ‘BUY’ on the stock with a price target of Rs 249,” says Sushil Finance research report.

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