February 17, 2017 / 14:42 IST
After subdued capacity utilisation over the last few quarters, Graphite India reported healthy utilisation level for Q3FY17 (85% in Q3FY17 compared to capacity utilisation of 75% in Q2FY17, 56% in Q3FY16). Demand for graphite electrodes has started picking up after the inventory correction at the customers’ end, auguring well for the company.
Outlook
Hence, we have upward revised the consolidated capacity utilisation level to 72% for FY17E (from 70% earlier), maintained consolidated capacity utilisation of 75% for FY18E and introduced capacity utilisation of 78% for FY19E. We value the company at 7.0x FY19E EV/EBITDA thereby arriving at a target price of Rs 100, with a HOLD recommendation on the stock.
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