Graphite India (GIL) reported an operationally subdued set of Q2FY21 numbers. It reported a consolidated loss at the EBITDA, PAT level. We had also estimated an EBITDA loss and net loss for the company on the back of a muted operating environment. For Q2FY21, GIL reported a consolidated topline of Rs. 485 crore (down 45% YoY, up 19% QoQ), higher than our estimate of Rs. 418 crore. The better-than-expected topline was on account of higher-than-expected capacity utilisation. Consolidated capacity utilisation in Q2FY21 was at 60% (61% in Q2FY20, 36% in Q1FY21), higher than our estimate of 45%. Consolidated EBITDA loss came in at Rs. 78 crore (our estimate of consolidated EBITDA loss of Rs. 84 crore). Consolidated other income for the quarter was at Rs. 50 crore (down 2% YoY, 26% QoQ), in line with our estimate of Rs. 50 crore. Subsequently, net consolidated loss for the quarter was at Rs. 41 crore (our estimate of net loss was Rs. 52 crore).
Valuation & Outlook
Going forward, on the global demand side, destocking of electrode inventory at customer end, which was delayed due to the Covid-19 crisis has now resumed. With respect to raw material costs, while needle coke prices have softened, they have not yet fully realigned with electrode prices. Hence, it is likely to lead to elevated input costs in the near term. GIL's balance-sheet remains robust with consolidated net cash balance of Rs. 2404 crore at the end of September 2020. We value the stock at 4x FY22E EV/EBITDA and arrive at a target price of Rs. 185. We maintain out HOLD recommendation on the stock.
For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_GraphiteIndia_Q2FY21.pdf
Shares of GRAPHITE INDIA LTD. was last trading in BSE at Rs.211.35 as compared to the previous close of Rs. 184.95. The total number of shares traded during the day was 712825 in over 11974 trades.
The stock hit an intraday high of Rs. 221.9 and intraday low of 183.6. The net turnover during the day was Rs. 149806920.