Tata Metaliks - Company Update - ICICI Securities

Tata Metaliks reported a healthy Q4FY20 performance wherein EBITDA and PAT increased sharply both QoQ and YoY. For Q4FY20, pig iron sales volume was at ~79500 tonnes (86000 tonnes in Q4FY19) while ductile iron sales volume was at ~54000 tonnes (54000 tonnes in Q4FY19). Topline for the quarter was at Rs. 521.6 crore (up 1% QoQ but down 12% YoY). Pig iron prices were up 7% QoQ while ductile iron prices were up 3% QoQ. EBITDA was at Rs. 120.3 crore (up 49% YoY, 54% QoQ). EBITDA margin was at 23.1% (13.6% in Q4FY19, 15.1% in Q3FY20). Higher realisations QoQ along with cost control measures aided EBITDA margin. RM cost as a percentage of sales was at 51.1% (59.5% in Q3FY20, 64.2% in Q4FY19). Ensuing PAT was at Rs. 77.0 crore (up 20% YoY, 68% QoQ).
Valuation & Outlook

The investment lined up in development of water infrastructure and allied projects augurs well for DI pipes demand, which is likely to grow at a steady pace in the medium term. To cater to this opportunity, Tata Metaliks has already started work on doubling its DI capacity, thereby providing healthy revenue visibility in the longer run. We value the stock at 6x FY22E EV/EBITDA and arrive at a target price of Rs. 600. Hence, we assign a BUY rating to the stock. Key risk to our call is a significant increase in raw material costs and lower-than-expected increase in demand for DI pipes.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_TataMetaliks_CoUpdate_Jun20.pdf

Shares of TATA METALIKS LTD. was last trading in BSE at Rs.495 as compared to the previous close of Rs. 498.05. The total number of shares traded during the day was 2965 in over 431 trades.

The stock hit an intraday high of Rs. 500.4 and intraday low of 484.15. The net turnover during the day was Rs. 1470510.

Source : Equity Bulls

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