Bhushan Steel - Q3FY12 Result Update - Emkay

Reco: HOLD
CMP: Rs 354
Target Price: Rs 315

Operating performance marred by fixed costs

- APAT at Rs 2.78 bn flat YoY even as EBITDA rose by 35% to Rs 7.2 bn. This was primarily on account of higher interest (up 125%) and depreciation (up 166%) costs

- EBITDA margin at 30%, up 241 bps YoY, on account of fall in raw material costs (208 bps) and employee costs (24bps). EBITDA/ tonne during the quarter at Rs 14118 (US$277)

- Topline at Rs 24.1 bn up 24% YoY aided by volume growth (10%) and realizations increase (13%). However on QoQ basis increase in realization (7%) was offset by volume drop (5%)

- Increasing fixed costs to restrict PAT growth going forward. With net D/E of 3X and overall uncertainty regarding ramp up, valuations look expensive. Maintain Hold with TP of Rs 315.

Source : Equity Bulls

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