P e r f o r m s w e l l …
Jindal SAW’s performance in Q2FY12 was broadly better than our
expectation wherein the topline came better then our expectation.
However, the EBITDA margin was muted as the company executed low
profit orders in the Saw pipe segment especially a large domestic order
where the company incurred an operational loss. The topline came at |
1446.0 crore (our estimate: | 1114.8 crore). This was higher by 80.5%
YoY and 27.6% QoQ. The topline was better than our expectation on the
back of higher than expected sales volumes. During the quarter, sales
were higher due to dispatches out of closing inventory of finished goods
at the end of previous quarter. However, EBITDA margins were lower and
stood at 11.9% as against our estimate of 15.3%. During the quarter, the
net loss on reinstatement of foreign currency monetary items was to the
tune of | 48.3 crore. As a result the ensuing reported PAT during the
period under review stood at | 53.7 crore.
ƒ Order book position
The order book of the company stood at $665 million. In terms of
vertical wise break-up the order book, large diameter pipes was
US$453 million, ductile iron pipes was US$149 million and seamless
pipes was US$63 million. Export orders share stands at 67% (which
has improved compared to ~ 65% in Q1FY12) of the total order
book.
V a l u a t i o n
At the current market price of | 130, the company is discounting its FY12E
and FY13E EV/EBITDA by 6.0 and 4.5x, respectively. We value the
company on an SOTP basis assigning 4.5 EV/EBITDA to the core business
and give a 50% holding company discount to the investments (|
41/share). We have arrived at a target price of | 143 and assigned a BUY
rating to the stock.
Jindal SAW’s performance in Q2FY12 was broadly better than our
expectation wherein the topline came better then our expectation.
However, the EBITDA margin was muted as the company executed low
profit orders in the Saw pipe segment especially a large domestic order
where the company incurred an operational loss. The topline came at |
1446.0 crore (our estimate: | 1114.8 crore). This was higher by 80.5%
YoY and 27.6% QoQ. The topline was better than our expectation on the
back of higher than expected sales volumes. During the quarter, sales
were higher due to dispatches out of closing inventory of finished goods
at the end of previous quarter. However, EBITDA margins were lower and
stood at 11.9% as against our estimate of 15.3%. During the quarter, the
net loss on reinstatement of foreign currency monetary items was to the
tune of | 48.3 crore. As a result the ensuing reported PAT during the
period under review stood at | 53.7 crore.
ƒ Order book position
The order book of the company stood at $665 million. In terms of
vertical wise break-up the order book, large diameter pipes was
US$453 million, ductile iron pipes was US$149 million and seamless
pipes was US$63 million. Export orders share stands at 67% (which
has improved compared to ~ 65% in Q1FY12) of the total order
book.
V a l u a t i o n
At the current market price of | 130, the company is discounting its FY12E
and FY13E EV/EBITDA by 6.0 and 4.5x, respectively. We value the
company on an SOTP basis assigning 4.5 EV/EBITDA to the core business
and give a 50% holding company discount to the investments (|
41/share). We have arrived at a target price of | 143 and assigned a BUY
rating to the stock.
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