Buy Mishra Dhatu Nigam; target of Rs 260: ICICI Direct

ICICI Direct's research report on Mishra Dhatu Nigam

Mishra Dhatu Nigam (Midhani) reported a subdued set of Q4FY20 numbers. Topline was at Rs 203.1 crore (down 39% YoY) while EBITDA was at Rs 50.1 crore (down 55% YoY). The EBITDA margin was at 24.6% compared to 32.9% in Q4FY19. PAT was at Rs 40.4 crore (down 50% YoY). In its provisional numbers declared in April 2020, Midhani had already indicated that Covid-19 lockdown has affected the final testing, certification and shipment during March 2020. In its provisional numbers itself, it had indicated that the topline for FY20 would remain flattish YoY, thereby implying a muted Q4FY20.For FY20, Midhani reported a topline of Rs 712.9 crore (flattish YoY), EBITDA of Rs 197.7 crore (up 8% YoY), EBITDA margin of 27.7% (25.8% in FY19) and PAT of Rs 159.7 crore (up 22% YoY).

Outlook

Despatch of finished materials has already started in May 2020. Backed by a strong order book position, we expect Midhani to report healthy performance, going forward. We value the stock at 22x FY22E EPS with a target price of Rs 260.

Mishra Dhatu Nigam 19072020-icici

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