Hold Graphite India; target of Rs 80:ICICIDirect

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26 Aug, 2025 12:21

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ICICIDirect's research report on Graphite IndiaGraphite India reported a mixed set of Q3FY16 numbers wherein the topline came in higher than our estimate while EBITDA, EBITDA margin and PAT came in lower than our estimates Topline for the quarter came in at | 356.6 crore, up 13.5% YoY and 12.0% QoQ and was better than our estimate of | 323.9 crore. Capacity utilisation came in at 56% lower than our estimate of 65% (63% each for both Q2FY16 as well as Q3FY15). Though production declined, the company sold off inventory that aided higher volumes during the quarter on a YoY basis EBITDA came in at | 42.2 crore, up 1.2% YoY but down 9.0% QoQ and below our estimate of | 48.5 crore. The EBITDA margin came in at 11.8%, down 274 bps QoQ, 144 bps YoY and lower than our estimate of 15.0% Effective tax rate for the quarter came in notably higher at 42.5% vis- à-vis our estimate of 33% (effective tax rate of 33.7% in Q2FY16 and 35.9% in Q3FY15). The ensuing PAT was at | 19.7 crore (down 3.4% YoY, 28.9% QoQ and lower than our estimate of | 26.3 crore) Graphite India reported a Q3FY16 muted performance due to subdued graphite electrodes prices. We expect pricing pressure on graphite electrodes to continue over the short to medium term. Subsequently, we have downward revised our consolidated EBITDA margin to 9.9% for FY16E (from 12.5% earlier) and to 12.9% for FY17E (from 12.5% earlier). We value the company at a discount of 30% to its global peer’s CY16E average EV/EBITDA of 8.9x (increased from 8.4x earlier). Consequently, we value the company at 6.2x FY17E EV/EBITDA. We arrive at a target price of | 80 and assign a HOLD rating to the stock.For all recommendations, click here Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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