Godawari Power & Ispat (Q4 FY12)

India Infoline News Service | Mumbai |

GPIL reported a 30.4% qoq jump in its topline to Rs5.5bn on the back of higher production of pellets & billets coupled with strong realizations across all segments.

CMP Rs106, Target Rs154, Upside 45.3%
 
  • Godawari Power & Ispat (GPIL) reported a 30.4% qoq jump in its topline to Rs5.5bn on the back of higher production of pellets & billets coupled with strong realizations across all segments. Production of iron ore which had dipped sharply in Q3 FY12 due to extended rains and logistics issues has recovered during the quarter. The company managed to produce 183,110 tons of iron ore, ~6x on a qoq basis. Pellet production increased to 167,500 tons from 150,150 tons in Q3 FY12, largely on account of improved supplies from captive iron ore mines. It continued to operate at +100% utilization rates. Sponge iron production too jumped by 24.2% qoq, led by increased supply from the captive iron ore mines. Steel product realizations were higher on a qoq basis, whereas that of ferro alloys were flat on a qoq basis.
  • External sales of pellets declined on a qoq basis despite increase in production due to higher internal consumption. Sales of all the steel products were quite strong on a qoq basis due to strong demand for long products in the domestic market. Pellet production under Ardent Steel increased 35.2% qoq due to higher supply of iron ore in the state. 
Quarterly operational data
(tons) Q4 FY12  Q3 FY12 % qoq Q4 FY11 % yoy
Production (tons)          
Iron ore    183,110 26,549   589.7 212,308   (13.8)
Pellets   167,500 150,150   11.6   133,750   25.2
Sponge iron   95,150 76,598   24.2 88,955   7.0
Billets   56,568 49,470    14.3 39,033   44.9
MS Rounds   22,211 17,034   30.4 22,514   (1.3)
HB wire   18,256 18,545   (1.6)   18,901.00   (3.4)
Ferro-alloys   2,152 2,387   (9.8) 1,312   64.0
Power (mn units)   103 98   5.5 92   12.2
Sales volume (tons)          
Pellets   58,278 76,753   (24.1) 49,561   17.6
Sponge iron   39,223 27,886   40.7 44,001   (10.9)
Billets   56,516 49,687   13.7 39,097   44.6
MS Rounds   18,219 12,300   48.1 17,822   2.2
HB wire   20,278 19,710   2.9 19,566   3.6
Ferro-alloys   2,761 766   260.5 2,322   18.9
Power (mn units)   14 15   (8.2) 22   (39.7)
Realisation (Rs/ton)          
Pellets   9,955 9,002   10.6 7,924   25.6
Sponge iron   23,441 21,464   9.2 19,445   20.5
Billets   33,731 32,046   5.3 28,741   17.4
MS Rounds   37,657 35,267   6.8 32,121   17.2
HB wire   39,525 37,818   4.5 34,811   13.5
Ferro-alloys   50,334 50,369   (0.1) 51,981   (3.2)
Power (Rs/units)   2.6   3.0   (13.0)   2.5   4.4
Source: Company, India Infoline Research 
  • Operating profit for the company doubled on a qoq basis led by strong realization and production numbers. In addition to this, the increase in supply of iron ore from the captive mine led to lower costs for the company. Supply of coal supply from Coal India too improved during the quarter. Raw material costs as a % of sales declined from 73.4% in Q3 FY12 to 65.6%. However, other expenditure increased on a qoq basis. We have taken the forex loss taken by the company in other expenditure as an extraordinary.

    Cost Analysis
    As a % of net sales Q4 FY12  Q3 FY12 % qoq Q4 FY11 % yoy
    Material costs 65.6 73.4 (774) 58.1 749
    Personnel Costs 2.0 2.3 (33) 2.4 (38)
    Other overheads 15.1
    BSE 216.90 11.35 (5.52%)
    NSE 217.10 11.55 (5.62%)

    ***Note: This is a NSE Chart

     

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