Brokerage house ICICIdirect.com has recommended hold rating on Adhunik Metaliks with a price target of Rs 20, in its August 30, 2013 research report.
ICICIdirect.com's report on Adhunik Metaliks
"Adhunik Metaliks (AML) reported a mixed set of Q4FY13 numbers wherein the topline came in below our expectation due to subdued metal sales volumes while the EBITDA margin came higher than our expectation on the back of the good performance of AML’s power business and improved operating efficiency in its steel & mining business. However, the company reported a net loss at the bottomline level due to higher than expected interest outgo. Consolidated net sales came in at Rs 766.5 crore, up 35.0 percent YoY but lower by 25.4 percent QoQ. The EBITDA came in at Rs 207.9 crore with corresponding EBITDA margins at 27.1 percent. However, primarily on the back of higher than expected finance cost (Rs 157.5 crore vs. our expectation of Rs 121.7 crore) the company reported net loss to the tune of Rs 9.9 crore. The company declared the unit 2 of its 540 MW power plant commercial during the quarter. The power segment reported topline of Rs 237.87 crore while EBIT was at Rs 42.3 crore. Though the availability of captive iron ore bodes well for AML, we continue to maintain a cautious view on the stock on the back of higher leverage. We maintain our HOLD rating on the stock with a target price of Rs 20."
"We have a cautious view on the stock in spite of captive available iron ore on the back of high debt gearing. On a trailing basis, debt-equity as of FY13P (June year ending) stands at 3.2x while debt-EBITDA as of FY13P stands at 7.2x. We have modelled steel sales of 3.9 lakh tonne in FY14E and FY15E. We have valued the company on an SOTP basis wherein we have valued the company’s core steel and mining business at 4x FY15E EV/EBITDA and the power business on a P/BV basis. We have arrived at a HOLD rating on the stock with a target price of Rs 20," says ICICIdirect.com research report.
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