Hold Maharashtra Seamless; target of Rs 215: ICICI Direct

For Q1FY17, Maharashtra Seamless reported a topline, EBIDTA and PAT below our estimate primarily on account of muted sales volume. Seamless pipes sales volume came in at 44000 tonne (our estimate: 44688 tonne) while ERW sales volume came in at 13500 tonne (our estimate: 18750 tonne). The total pipes sales volume came in at 57500 tonne, lower than our estimate of 63438 tonnes. Gross income from operations came in at Rs 317.6 crore. After adjusting for excise duty, net operating income stood at Rs 288.4 crore, significantly lower than our estimate of Rs 321.1 crore EBITDA came in at Rs 29.2 crore lower than our estimate of Rs 37.3 crore. EBITDA margins came in at 10.1% (our estimate: 11.6%). The resulting blended EBITDA/tonne came in at Rs 5083/tonne (our estimate: Rs 5883/tonne) The company reported other income of Rs 24.3 crore, up 53.8% YoY and higher than our estimate of Rs 12.0 crore. The ensuing PAT came in at Rs 23.9 crore (our estimate: Rs 30.6 crore).

MSL reported a subdued performance for Q1FY17 on account of lower-than-expected ERW sales volume. Going forward, we believe the imposition of anti-dumping duty augurs well for the company as it would aid in improving capacity utilisation levels for MSL. We value the company on an SOTP basis and subsequently arrive at a target price of Rs 215. We have a HOLD recommendation on 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.