Hold Graphite India; target of Rs 825: Centrum

Centrum's research report on Graphite India

We continue to remain positive on prospects of Graphite India (GIL) led by our view of electrode industry remaining in an upcycle for next few years as postulated in our recent sector report. We continue to expect extremely strong earnings trajectory for GIL in next few years with peak earnings in FY19E and moderation kicking in from FY20E. GIL remains the best bet to play the electrode upcycle with healthy balance sheet, strong adj.

Outlook

We continue to value GIL on our conservative AOCF/EV yield methodology using five year average adj. cash flows (FY16-20E) to arrive at our revised TP of Rs825.  Maintain Hold. Key downside risk is margin pressure due to raw material volatility while upside risk is continuation of high spreads into FY20E/21E as that of FY19E. For all recommendations report, click here

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