P e r f o r m s w e l l …
Graphite India’s (GIL’s) quarterly performance for Q2FY12 was broadly
better than our expectations, primarily on the back of higher sales
volumes. The capacity utilisation during the quarter stood at a healthy
97% level (standalone entity). During the quarter under review, the
topline came at | 461.6 crore (higher by 42.5% YoY and 44.9% QoQ),
which was better than our expectation of | 337.9 crore. The EBITDA
margin declined 290 bps QoQ and 970 bps YoY to 16.4% (our estimate:
19.2%). The ensuing EBITDA during the period under review stood at |
75.6 crore (our estimate: 64.8%), higher by 23% QoQ but lower by 10.5%
YoY. The ensuing reported PAT during the period under review stood at |
41.9 crore (our estimate: | 38.1 crore), higher by 13.6% QoQ but lower by
14.9% YoY.
ƒ Capacity utilisation levels higher both YoY as well as QoQ
Due to the improved demand scenario, there was a sharp increase
in capacity utilisation levels. The capacity utilisation level increased
to 97% in Q2FY12 from 78% in Q2FY11 and from 79% in Q1FY12.
During the quarter under review, electrodes production and sales
volume increased by 24% and 40%, respectively.
V a l u a t i o n
At the CMP of | 72, the stock is discounting its FY13E EPS by 6.7x and
FY13E EV/EBITDA by 4.9x. We expect the company to operate at ~ 70%
utilisation at its consolidated expanded capacity of 98,000 tonnes in
FY13E. Furthermore, we expect demand to stay firm on the back of higher
production through the EAF route of steel making. We have valued the
stock at a 15% discount to the global average EV/EBITDA of 6.5x,
subsequently arriving at 5.5x FY13E EV/EBITDA. We have assigned a
BUY rating to the stock with a target price of | 83.
Graphite India’s (GIL’s) quarterly performance for Q2FY12 was broadly
better than our expectations, primarily on the back of higher sales
volumes. The capacity utilisation during the quarter stood at a healthy
97% level (standalone entity). During the quarter under review, the
topline came at | 461.6 crore (higher by 42.5% YoY and 44.9% QoQ),
which was better than our expectation of | 337.9 crore. The EBITDA
margin declined 290 bps QoQ and 970 bps YoY to 16.4% (our estimate:
19.2%). The ensuing EBITDA during the period under review stood at |
75.6 crore (our estimate: 64.8%), higher by 23% QoQ but lower by 10.5%
YoY. The ensuing reported PAT during the period under review stood at |
41.9 crore (our estimate: | 38.1 crore), higher by 13.6% QoQ but lower by
14.9% YoY.
ƒ Capacity utilisation levels higher both YoY as well as QoQ
Due to the improved demand scenario, there was a sharp increase
in capacity utilisation levels. The capacity utilisation level increased
to 97% in Q2FY12 from 78% in Q2FY11 and from 79% in Q1FY12.
During the quarter under review, electrodes production and sales
volume increased by 24% and 40%, respectively.
V a l u a t i o n
At the CMP of | 72, the stock is discounting its FY13E EPS by 6.7x and
FY13E EV/EBITDA by 4.9x. We expect the company to operate at ~ 70%
utilisation at its consolidated expanded capacity of 98,000 tonnes in
FY13E. Furthermore, we expect demand to stay firm on the back of higher
production through the EAF route of steel making. We have valued the
stock at a 15% discount to the global average EV/EBITDA of 6.5x,
subsequently arriving at 5.5x FY13E EV/EBITDA. We have assigned a
BUY rating to the stock with a target price of | 83.
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