Maharashtra Seamless Ltd - BUY - TP Rs.560 - Result Update - Kotak

Maharashtra Seamless Ltd - BUY - TP Rs.560 - Result Update - Kotak- MSL Q2FY18 PAT declined 12.5% YY despite significant growth in revenue due to execution of low margin legacy orders. EBITDA margin contracted YY due to 1/ booking of low margin legacy orders and 2/ high base of Q2FY17.

- We consider that this is a quarterly aberration and maintain our FY19 earnings estimate. We believe that MSL valuations can get rerated on back of strong growth in company's estimated consolidated profits through FY17-19E driven by 1) recovery in demand for seamless pipes in the domestic/international market and 2) imposition of anti-dumping duty on Chinese imports would lead to demand shifting towards domestic industry and 3) limited competition from domestic players who are struggling with their highly leveraged balance sheets.

- We value MSL stock at 9x EV/EBITDA FY19E earnings and maintain BUY with an unchaged target price of Rs 560 per share.

Shares of MAHARASHTRA SEAMLESS LTD. was last trading in BSE at Rs.445 as compared to the previous close of Rs. 439.3. The total number of shares traded during the day was 6997 in over 202 trades.

The stock hit an intraday high of Rs. 445 and intraday low of 439. The net turnover during the day was Rs. 3085320.

Source : Equity Bulls

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