Hold Maharashtra Seamless;target of Rs 125: ICICIDirect

ICICIDirect's research report on Maharashtra SeamlessMaharashtra Seamless (MSL) reported a subdued set of Q3FY16 numbers wherein the topline and EBITDA came in significantly lower than our estimates. However, on the back of higher-than-expected other income PAT came in higher than our estimate Topline for the quarter came in at | 190.6 crore (down 45.5% YoY, 27.8% QoQ and lower than our estimate of | 258.4 crore). Seamless pipes sales volume was at 27693 tonnes, down 37.3% YoY and 28.1% QoQ and lower than our estimate of 37813 tonnes. ERW pipes sales volume were at 13749 tonnes, down 18.6% YoY and lower than our estimate of 16250 tonnes EBITDA came in at | 0.2 crore, significantly lower both QoQ and YoY and lower than our estimate of | 2.5 crore. The EBITDA margin came in at 0.1%, lower than our estimate of 1.0% Other income came in at | 14.75 crore, up 35% QoQ and higher than our estimate of | 12.0 crore. The ensuing PAT came in at | 4.95 crore, higher than our estimate of | 4.5 crore.Going forward, on the back of a steep fall in global realisations for seamless pipes we have revised EBITDA margin estimates for FY16E to 0.5% (from 3.0% earlier) and for FY17E to 7.0% (from 8.0% earlier). We have a cautious view on the company on the back of a steep fall in seamless pipe realisations. We have valued the company on an SOTP basis and subsequently arrived at a target price of | 125. 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.

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