Graphite India - 1QFY2013 Result Update - Angel Broking

For 1QFY2013, Graphite India Ltd (GIL)'s top-line came in at Rs.418cr, registering a 31.1% yoy growth. The EBITDA margin contracted by 179bp yoy to 17.5% while the EBITDA increased by 18.9% yoy to Rs.73cr. The PAT increased by 10.0% yoy to Rs.41cr on the back of higher revenue. We maintain our Buy view on the stock.

Strong sales growth momentum continues: GIL reported strong sales growth in 1QFY2013. Its revenue increased by 31.1% yoy to Rs.418cr. The graphite segment, which contributed around 87.6% to the company's total revenue, registered a strong growth of 34.1% yoy to Rs.366cr, while the steel segment managed a whopping 163% yoy increase to Rs.24cr. The electrode sales volume increased by 15.0% yoy while the average capacity utilization increased from 79% in 1QFY2012 to 89% in 1QFY2013. The company's OPM declined by 179bp yoy to 17.5% due to increased other expenditure, which grew to 29.3% as a percentage of sales in 1QFY2013 vs 21.9% as a percentage of sales in 1QFY2012. The PAT increased by 10.0% yoy to Rs.41cr. The other income declined by 34.4% yoy to Rs.5cr while interest cost increased by 102% yoy to Rs.5cr during the quarter. Consequently, the PAT margin contracted by 186bp yoy to 9.7% due to the above reason.

Outlook and valuation: We remain positive on the prospects of GIL, owing to strong demand from steel manufacturers. Realizations are also set to increase as global players have hiked their prices recently. We expect GIL to post a 12.2% CAGR in revenue over FY2012-14E and PAT to witness a 13.6% CAGR over the same period. At the current market price, the stock is trading at an attractive valuation of 0.9x its FY2014E BV. We have valued the stock at its five-year median of 1.1x one-year forward book value to arrive at a target price of Rs.113. We maintain our Buy recommendation on the stock.

Source : Equity Bulls

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