GMDC - Q3FY13 Result Update - Sushil Finance

GMDC has reported decent numbers for Q3FY13. Amidst low volume off-take in the quarter, we are downward revising our earnings estimate for FY13E by 8%. However; we have upward revised our FY14E earnings by 4.3% post factoring in 0.5 mn output from Umarsar mine at a realization of Rs.1,200/ton as against management guidance of over Rs.1,400/ton.

We continue to recommend BUY on the stock as we believe the huge discounting (~36% on EV/EBITDA) to coal India is highly unwarranted given that the company has a good pipeline of mine additions which will significantly add volumes in the subsequent years coupled with likely commencement of Alumina JV with Nalco which will significantly add value to the company's core business.

Thus, based on consistent volume growth, strong pricing power, robust cash generation (Rs.9551 mn in FY14E), healthy return ratios and likely improvement in the power business we maintain 'BUY' on the stock with a price target of Rs.249.

Source : Equity Bulls

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