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Tata Metaliks - Q2FY21 Company Update - ICICI Securities

Posted On: 2020-10-22 07:53:13

Tata Metaliks (TML) reported a healthy set of Q2FY21 numbers. Pig iron reported sales volume of 85684 tonnes, up 12% YoY 167% QoQ. Ductile iron reported sales volume of 48908 tonnes, up 80% QoQ but down 13% YoY. The YoY decline in sales volumes of ductile iron pipe was on account of delays in project sites arising out of Covid impact. The company reported a topline of Rs. 520 crore, up 2% YoY and 148% QoQ while EBITDA came in at Rs. 109 crore vs. Rs. 41 crore in Q2FY20 and Rs. 10 crore in Q1FY21. EBITDA margin came in at 21.1% compared to 8.0% in Q2FY20, 4.9% in Q1FY21. Ensuing PAT came in at Rs. 82 crore, up 248% YoY.

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 longer term horizon. The government had constituted the Jal Shakti Mantralaya whose primary objective is to work with states to ensure Har Ghar Jal (piped water supply) to all rural households by 2024 under the Jal Jeevan Mission, auguring well for DI pipes demand. We value the stock at 6x FY22E EV/EBITDA and arrive at a target price of Rs. 675. 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: Metaliks_CoUpdate_Oct20.pdf

Shares of TATA METALIKS LTD. was last trading in BSE at Rs.568.7 as compared to the previous close of Rs. 578.5. The total number of shares traded during the day was 7209 in over 532 trades.

The stock hit an intraday high of Rs. 581.8 and intraday low of 559.5. The net turnover during the day was Rs. 4103611.

Source: Equity Bulls

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