Tata Sponge Iron - 4QFY2013 Result Review - Angel Broking

For 4QFY2013, TSIL reported a topline of Rs. 211cr, 7.1% higher than our estimate of Rs. 197cr. However, the results were disappointing on the EBITDA margin front which contracted by 502bp yoy to 8.8% as compared to 13.9% during 4QFY2012. Contraction in EBITDA margin was primarily due to higher raw material cost and employee expenses during the quarter. Consequently, net profit declined by 36% yoy during the quarter to Rs. 9cr.

For the full year FY2013, revenue grew by 25.5% yoy to Rs. 796 on account of better realization of sponge iron and resumption volumes of sponge iron sales which were impacted during FY2012 due to iron ore supply issues; while increased raw material cost and employee expenses led to contraction of EBITDA margin by 273bp for FY2013. Net profit for FY2013 stood at Rs. 85cr as compared to Rs. 76cr in FY2012.

As we rollover to FY2015, due to attractive valuations, we maintain our Buy recommendation on the stock with a target price of Rs. 358 based on a target P/B of 0.7x for FY2015E.

Source : Equity Bulls

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