ICICI Direct is bullish on HEG has recommended buy rating on the stock with a target price of Rs 5750 in its research report dated November 09, 2018.
ICICI Direct's research report on HEG
HEG again reported a stellar performance in Q2FY19 marked by sustained healthy realisation, lower raw material cost. Capacity utilisation was at ~85%. Revenue from operation was at Rs 1793.8 crore (up 338% YoY, 13% QoQ), higher than our estimate of Rs 1589.3 crore The company reported a strong EBITDA of Rs 1368.8 crore, higher than our estimate of Rs 1017 crore. Resultant EBITDA margin was at 76.3% (vs. Q2FY18: 46.3%, Q1FY19:74.8% and our estimate of 64%) Reported PAT came in at Rs 888.9 crore vs. our estimate of Rs 665.7 crore. The company declared an interim dividend of Rs 30/share.
We continue to remain positive on the graphite electrodes space and value the company at 10x FY20E EPS of Rs 575 thereby arriving at a target price of Rs 5750. We maintain our BUY rating on the stock.
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