Buy Godawari Power & Ispat - Emkay

Godawari Power & Ispat
Reco: BUY
CMP: Rs 105
Target Price: Rs 133

Lower mining output drags bottomline

- APAT at Rs 106 mn, flat QoQ, stood lower than our estimates on higher RM costs (up 17% QoQ); Consol EBITDA at Rs 560 mn was up 6% QoQ, however, margins fell 63 bps to 11.6%

- Consolidated revenues at Rs 4.8 bn in line with estimates, was up 12% QoQ primarily due to higher steel billets (65%) and pellets sales (45%)

- Captive iron ore mining at 26.5 kt, was down 76% YoY and 58% QoQ due to extended monsoon and logistics issues. This raised the total RM costs due to purchases from the market

- Believe operational performance should revive going forward with better capacity utilizations. Maintain our FY13 EPS at Rs 31.8; Buy with revised TP of Rs 133 (4.5xFY13 EV/ EBITDA).

Source : Equity Bulls

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