GMDC - 3QFY13 Results - Nirmal Bang

Gujarat Mineral Development Corporation (GMDC) reported subdued performance for 3QFY13, with EBITDA being 20%/21% below and PAT 18%/15% below our/street estimates, respectively.

Lower lignite volume due to removal of lower overburden on account of machinery constraints at Bhavnagar mine and lower PLF (plant load factor) at Arkimota plant and wind power plant are primary reasons for the dismal results.

We have marginally revised our estimates after factoring in the rise in lignite prices and diesel price hike for bulk consumers. However, we have cut our target multiple from 5.7x FY14E EV/EBITDA to 5.0x FY14E EV/EBITDA due to increased capex in value-dilutive wind power projects. Our revised TP of Rs223 (11% down from our earlier TP of Rs251) is still 16% above the CMP and hence we have retained our Buy rating on the stock.

Source : Equity Bulls

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