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Research
Graphite India - Q1FY21 Result Update - ICICI Securities
Posted On : 2020-08-15 12:01:41( TIMEZONE : IST )
Graphite India (GIL) reported a subdued set of Q1FY21 numbers wherein it reported a consolidated loss at the EBITDA, PAT level. During the quarter, the performance was impacted by inventory write down taken by the company. For Q1FY21, GIL reported a consolidated topline of Rs. 409 crore (down 58% YoY, 32% QoQ), compared to our estimate of Rs. 335 crore. Better than expected topline was on account of higher-than-expected capacity utilisation. Consolidated capacity utilisation in Q1FY21 was at 36% (75% in Q1FY20, 41% in Q4FY20), higher than our estimate of 30%. Consolidated other income for the quarter was at Rs. 68 crore (up 196% QoQ), higher than our estimate of Rs. 20 crore. Consolidated EBITDA loss came in at Rs. 131 crore (our estimate of consolidated EBITDA loss of Rs. 70 crore). Net consolidated loss was at Rs. 78 crore (our estimate of consolidated net loss of Rs. 68 crore). During the quarter, GIL had recognised it carrying inventory on net realisable value (NRV) basis to the extent applicable and has accordingly taken a charge of Rs. 159 crore on the cost of inventory. This resulted in negative reported EBITDA and net loss for the quarter.
Valuation & Outlook
Graphite India's Q1FY21 performance was impacted by Rs. 159 crore of inventory write down taken by the company. Furthermore, during the quarter, lower steel production levels impacted both graphite electrode demand and pricing. Going forward, FY21 is expected to remain a challenging year for the company as graphite electrodes demand and realisation is expected to remain under pressure. We value the stock at 4x FY22E EV/EBITDA and arrive at a target price of Rs. 200, assigning a HOLD recommendation to the stock.
For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_GraphiteIndia_Q1FY21.pdf
Shares of GRAPHITE INDIA LTD. was last trading in BSE at Rs.178.9 as compared to the previous close of Rs. 183.15. The total number of shares traded during the day was 48495 in over 1018 trades.
The stock hit an intraday high of Rs. 187.65 and intraday low of 178. The net turnover during the day was Rs. 8867781.
