Ballarpur Industries - De-leveraging play - Emkay

- BILT's RGP (Rayon Grade Pulp) and its global operations at Malaysian subsidiary has been putting pressure on company's profitability along with increase in input cost

- Highly leveraged balance sheet (2.3x assuming perpetual equity as debt) and significantly higher outgo as interest payment (~45% of EBIDTA) has wiped out its profitability

- Industry turnaround is likely to boost domestic margins in paper business and improve profitability with EBIDTA and PAT CAGR (FY13-15) of 12% and 33% respectively

- BILT is a de-leveraging play in the sector as improved cash flows will reduce debt. Maintain our Accumulate rating with price target of Rs 23 (based on 0.6x FY14 book value).

Source : Equity Bulls

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