Buy Adhunik Metaliks Ltd - Motilal Oswal

Adhunik Metaliks (ADML IN; Mkt Cap USD0.2b, CMP Rs83, Buy)

Adhunik Metaliks' 3QFY11 consolidated PAT grew 41% YoY to Rs541m (up 48% QoQ, higher than our estimate of Rs446m).

Orissa Manganese and Mineral's (OMM) PAT increased 86% YoY to Rs430m (up 47% YoY) due to high manganese volumes and better realizations.

OMM sold 214k tons of iron ore, up 35% QoQ and it sold 54k tons of medium/high grade manganese ore. Average iron ore realization increased 25% QoQ.

A captive iron ore mine in Keonjhar district has been delayed due to procedural issues in Orissa.

The commissioning of a 1.2mtpa beneficiation unit and a pellet plant will expand margins. The beneficiation plant is expected to be commissioned in 1QFY12.

We expect consolidated EPS CAGR of 19% to Rs18.8 over FY10-13. The stock trades at FY12E P/E of 4.7x and EV/EBITDA of 5x. Reiterate Buy with a target price of Rs154 (based on 6.5x FY12E EV/EBITDA).

Source : Equity Bulls

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