Views on Electrosteel Castings 3QFY2014 results - Angel Broking

Views of Mr. Bhavesh Chauhan (Sr. Research Analyst - Metals & Mining, Angel Broking) on Electrosteel Castings 3QFY2014 results:

Electrosteel Castings EBITDA up 102.5%

"Electrosteel Castings' (ECL) 3QFY2014 net revenue increased by 3.9% yoy to Rs. 491cr. However, raw material costs decreased by 7.3% yoy to Rs. 236 and other operating income grew by 215.6% yoy to Rs. 22cr. This resulted in EBITDA growing by 102.5% yoy to Rs. 95cr. Interest expenses grew by 34.1% yoy to Rs. 36cr and other income decreased by 92.3% yoy to Rs. 3cr which resulted in reported net profit growing by only 2.7% yoy to Rs. 34cr. The company reported an exceptional forex loss of Rs. 3cr during 3QFY2014, compared to exceptional forex loss of Rs. 6cr in 3QFY2013. Excluding these exceptional items, adjusted net profit decreased by 6.2% yoy to Rs. 36cr. During the quarter, the company issued and allotted 1.7cr shares to promoters on a preferential basis at a price of Rs. 13.85/share, which will result in equity infusion of Rs. 24cr in the company. In our view, this preference issue has been undertaken to improve ECL's debt equity position which in turn will enable it to raise additional debt. The additional funds are likely to be deployed to fund expansion activities at its associate, Electrosteel Steels, where ECL holds 39.6% stake. We keep our rating and target price on the stock under review."

Electrosteel Castings 3QFY2014 Result Review (CMP: Rs. 13/ Target Price: NA/ Recommendation: Under review)

Source : Equity Bulls

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