Vardhman Special Steel - Result Update - ICICI Securities

Vardhman Special Steel (VSSL) reported a steady set of Q4FY20 numbers. Sales volume for the quarter was at 35715 tonnes, up 3.9% YoY). Topline was at Rs. 205.7 crore (down 15% YoY but up 9% QoQ). EBITDA was at Rs. 15.8 crore, up 49% YoY. EBITDA during the quarter was aided by lower cost of stores and spares consumed compared to last year (Q4FY19 cost was higher due to higher production to build inventory for the planned shutdown) and also on account of a reduction in graphite electrode prices. Ensuing PAT was at Rs. 3.6 crore.

Valuation & Outlook

VSSL reported a steady performance for Q4FY20 on the back of lower costs on a YoY basis. Going forward, FY21E is expected to be a challenging year for the company on account of muted demand from the automobile sector. Going forward, we value the stock at 6x FY22E EV/EBITDA and arrive at a target price of Rs. 65, with a HOLD recommendation on the stock.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_VardhmanSteel_Q4FY20.pdf

Shares of VARDHMAN SPECIAL STEELS LTD. was last trading in BSE at Rs.61.7 as compared to the previous close of Rs. 62.85. The total number of shares traded during the day was 971 in over 11 trades.

The stock hit an intraday high of Rs. 64.6 and intraday low of 60.15. The net turnover during the day was Rs. 60320.

Source : Equity Bulls

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