Godawari Power & Ispat Ltd (Q2 FY13)

Godawari Power & Ispat (GPIL) on a standalone basis reported an 44.5% yoy jump in its topline to Rs4.9bn on the back of higher production of pellets & billets coupled with strong realizations across all steel products. However, topline was lower by 2% qoq due to seasonal factors and a slide in steel prices qoq. Production of iron ore doubled on a yoy basis to 128,459 tons, but lower by 50.8% qoq. The decline in iron ore ouptut on a qoq basis was due to heavy rains during the quarter. Pellet production too declined qoq by 8.8% qoq due to lower iron ore output. On a yoy basis, except sponge iron, production of all products was higher on a yoy basis. Realisation of all steel products was lower by 5-10% qoq due to subdued demand in the domestic market. However, we are negatively surprised by the quantum of the decline.