2026-07-05 19:05:55
Latest Post
Axis Bank Gross Advances Hit ₹12.7 Trillion in Q1 FY27,Term Deposits Lead Inflows
CG Semi commences commercial production at its G1 OSAT facility in Sanand, Gujarat
Oswal Pumps Secures Additional Order for 10,000 Solar Pumps from MSEDCL Worth ₹235.92 Cr
Hon'ble Prime Minister Inaugurates SJVN's 1000 MW Bikaner Solar Power Project
Kotak Mahindra Bank Advances Cross ₹5.1 Trillion in Q1 FY27, Average Deposits Up 13.6% YoY
Research
HEG - Topline beats estimate, margins disappoints... - ICICIdirect
Posted On : 2012-11-02 19:17:20( TIMEZONE : IST )
HEG reported mixed set of numbers for Q2FY13 wherein the topline came in above our estimates, while the EBITDA and EBITDA margin came below our estimate. The company reported Net Sales of Rs.439.8 crore for the quarter, higher by 14.4% QoQ & by 37.8% YoY and was above our estimates of Rs.377.5 crore due to better then expected capacity utilisation levels (~85% in Q2FY13). The EBITDA came in at Rs.68.1 crore, lower by 33.9% QoQ, however higher by 54.3% YoY and was below our estimate of Rs.73.0 crore. Rise in operating costs resulted in muted margin during the quarter under review. The EBITDA margin at 15.5% was below our estimate of 19.4%. Lower cost needle coke inventory acquired last year has been exhausted while the current year needle coke stock acquired at increased but competitive rates. During the quarter under review the company reported a foreign exchange gain of Rs.3.6 as compared to foreign exchange loss of Rs.48.4 crore in Q1FY13 and foreign exchange loss of Rs.11.6 crore in Q2FY12. The consequent PAT came in at Rs.35.9 crore (our estimate: Rs.36.5 crore), higher by 54.6% QoQ & by 165.2% YoY. Going forward, we believe the performance of the company will depend on the demand scenario in European and US economies. We have maintained our HOLD rating on the stock with a target price of Rs.222.
Healthy capacity utilisation for Q1FY13
Capacity utilisation for Q2FY13 was ~85% (I-direct estimate: ~80%) as against ~75% in Q1FY13. Going forward, the management expects capacity utilisation rates to be ~80-85% for FY13E.
European, US markets hold key
Going forward, we expect the company to operate at ~85% and 88% capacity utilisation in FY13E and FY14E, respectively on its expanded capacity of 80,000 tonne. We have valued the stock on an SOTP basis valuing the core business at a 15% discount to its global peers average EV/EBITDA of 6.4x, subsequently arriving at 5.4x FY14E EV/EBITDA and giving a 30% discount to its stake in BEL. Thus, we have arrived at a target price of Rs.222. We have assigned a HOLD rating to the stock.
