Graphite India - Result Update - ICICI Securities

Graphite India (GIL) reported a disappointing set of numbers for Q4FY20 wherein the company reported a loss at both the EBITDA and PAT level. On a consolidated basis, Graphite India reported capacity utilisation of 41%, lower than our estimate of 50%.Consolidated topline for the quarter was at Rs. 602 crore (down 64% YoY, 6% QoQ, our estimate of Rs. 530.7 crore).On the back of higher than expected operating cost, Graphite India reported a loss at EBITDA level. EBITDA loss was at Rs. 26 crore (our estimate of EBITDA profit of Rs. 66.3 crore).During the quarter, there was reversal of Rs. 61 crore out of the write-down of Rs. 490 crore in Q3FY20. Adjusting for same, the EBITDA loss for the quarter was at Rs. 87 crore. The ensuing consolidated net loss for the quarter was at Rs. 7 crore.

Valuation & Outlook

Graphite India reported a muted performance in Q4FY20 on the back of weak demand from the steel sector. Going forward over the near term, the demand for graphite electrodes is expected to remain subdued due to partial closure of steel capacities globally, lower steel production and de-stocking of electrode inventory at customer end at a slower pace than anticipated, thereby adversely impacting demand prospects. We value the stock at 6x FY22E EPS and arrive at a target price of Rs. 200. We downgrade the stock from BUY to HOLD.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_GraphiteIndia_Q4FY20.pdf

Shares of GRAPHITE INDIA LTD. was last trading in BSE at Rs.199 as compared to the previous close of Rs. 203.3. The total number of shares traded during the day was 67544 in over 2240 trades.

The stock hit an intraday high of Rs. 202.45 and intraday low of 193.5. The net turnover during the day was Rs. 13336461.

Source : Equity Bulls

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