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| India Infoline Research Team / 15:46 , Jul 29, 2010 |
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CMP Rs245, Target Rs280, Upside 14.1%
- Revenues rise 11.8% yoy, but substantially below our expectations on account of lower throughput as the incremental 1mn ton capacity which was added recently was under stabilization phase. Total throughput was lower by 13.4% yoy at 2.3mn tons.
- GRMs were at US$1.8/bbl as against US$6.9/bbl in Q1 FY10 and US$4.3/bbl in Q4 FY10, much lower than expectations. The management has guided for US$4.5/bbl GRM in Q2 FY11.
- The company reported a net loss of Rs553mn v/s a profit of Rs3bn in Q1 FY10. This is a second consecutive quarter of loss for the company.
- We have lowered our estimates to factor in weaker than expected results and have reduced our target price to Rs280. Maintain BUY rating.
Results table
| (Rs m) |
Q1 FY11 |
Q1 FY10 |
% yoy |
Q4 FY10 |
% qoq |
| Throughput (mn tons) |
2.3 |
2.7 |
(13.4) |
1.9 |
24.7 |
| GRMs (US$/bbl) |
1.8 |
6.9 |
(74.0) |
4.3 |
(58.1) |
| Net sales |
63,277 |
56,604 |
11.8 |
54,653 |
15.8 |
| Material costs |
(59,084) |
(50,003) |
18.2 |
(50,844) |
16.2 |
| Purchases |
(2,278) |
(191) |
1,091.9 |
(1,465) |
55.4 |
| Personnel costs |
(582) |
(450) |
29.2 |
(1,179) |
(50.6) |
| Other overheads |
(1,152) |
(1,282) |
(10.1) |
(1,732) |
(33.5) |
| Operating profit |
181 |
4,677 |
(96.1) |
(568) |
(131.8) |
| OPM (%) |
0.3 |
8.3 |
(798) bps |
(1.0) |
132 bps |
| Depreciation |
(741) |
(665) |
11.4 |
(644) |
15.0 |
| Interest |
(348) |
(279) |
24.4 |
(425) |
(18.2) |
| Other income |
80 |
884 |
(91.0) |
690 |
(88.5) |
| PBT |
(828) |
4,617 |
- |
(947) |
- |
| Tax |
275 |
(1,570) |
- |
336 |
- |
| Effective tax rate (%) |
33.2 |
34.0 |
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35.5 |
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| Adjusted PAT |
(553) |
3,047 |
- |
(611) |
- |
| Adj. PAT margin (%) |
(0.9) |
5.4 |
(626) bps |
(1.1) |
24 bps |
| Ann. EPS (Rs) |
(14.8) |
81.8 |
(118.2) |
(16.4) |
(9.4) | Source: Company, India Infoline Research
Financial summary
| Y/e 31 Mar (Rs m) |
FY09 |
FY10 |
FY11E |
FY12E |
| Revenues |
319,639 |
249,726 |
274,907 |
275,307 |
| yoy growth (%) |
14.1 |
(21.9) |
10.1 |
0.1 |
| Operating profit |
(1,751) |
8,532 |
14,337 |
18,213 |
| OPM (%) |
(0.5) |
3.4 |
5.2 |
6.6 |
| Pre-exceptional PAT |
(4,060) |
6,032 |
8,219 |
10,729 |
| Reported PAT |
(3,973) |
6,032 |
8,219 |
10,729 |
| yoy growth (%) |
- |
- |
36.3 |
30.5 |
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| EPS (Rs) |
(27.3) |
40.5 |
55.2 |
72.0 |
| P/E (x) |
- |
6.1 |
4.4 |
3.4 |
| Price/Book (x) |
1.2 |
1.1 |
0.9 |
0.8 |
| EV/EBITDA (x) |
- |
9.0 |
4.9 |
3.7 |
| Debt/Equity (x) |
0.5 |
1.2 |
0.9 |
0.7 |
| RoE (%) |
(12.4) |
18.5 |
22.0 |
24.5 |
| RoCE (%) |
(6.5) |
12.5 |
16.7 |
20.3 | Source: Company, India Infoline Research
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