ICICIdirect.com's report on Maharashtra Seamless
Maharashtra Seamless reported a mixed set of Q1FY15 numbers. The topline and EBITDA came in below our estimates while PAT came in line with our estimates on account of higher than expected other income
The company reported a net income from operations of Rs 269 crore for the quarter, down 17.6% QoQ and 17.8% YoY and below our estimate of Rs 319.3 crore
The EBITDA came in at Rs 14.9 crore (EBITDA margin of 5.5%) and was below our estimate of Rs 21.8 crore
Other income for the quarter came in at Rs 21.2 crore, up 77.3% YoY and better than our estimate of Rs 15 crore. The consequent PAT came in at Rs 22.5 crore, down 20.8% QoQ and 18.5% YoY and in line with our estimate of Rs 22.7 crore
The recent decision of imposition of safeguard duty on imported seamless tubes bodes well for the company. The imposition of safeguard duty will aid the company in increasing its sales volume in the domestic market.
"Going forward, we expect an improvement in capacity utilisation levels. Hence, we have modelled seamless sales volume of 2,17,500 tonnes (1,65,000 tonnes earlier) and ERW volume of 55,000 tonnes for FY15E. We have also revised upward our FY16E seamless pipe volume estimates wherein we have modelled sales volume of 2,75,000 tonnes (176,000 tonnes earlier) for seamless pipes and 60,000 tonnes for ERW pipes. Subsequently, we have upgraded the stock to HOLD with a target price of Rs 330, valuing the company at 6x FY16E EV/EBITDA (increased from 5x earlier on account of improved operating environment)", says ICICIdirect.com research report.
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