Beruflich Dokumente
Kultur Dokumente
Monnet Ispat
Performance highlights
Particulars (` cr) Net sales EBITDA EBITDA margin (%) Net profit 4QFY12 536 138 25.8 83 4QFY11 446 129 28.9 77 % chg (yoy) 20.4 7.5 (308)bp 8.5 3QFY12 481 125 26.0 73 % chg (qoq) 11.5 10.4 (26)bp 13.7
BUY
CMP Target Price
Investment Period
Stock Info Sector Market Cap (` cr) Beta 52 Week High / Low Avg. Daily Volume Face Value (`) BSE Sensex Nifty Reuters Code Bloomberg Code Steel 2,888 0.6 561/305 11,582 10 16,328 4,943 MNET.BO MISP@IN
`450 `593
12 Months
Robust top-line performance: Monnet Ispat (MIL) reported robust top-line performance for 4QFY2012. The companys top line grew by 20.4% yoy to `536cr mainly due to increased realizations of sponge iron, which grew by 23.2% yoy to `24,159/tonne. The companys structural steel sales volumes grew by 25.7% yoy to 21,065 tonnes, while power sales volumes declined by 23.5% yoy to 180mn units. Net realization on power sales grew by 14.3% yoy and 2.7% qoq to `3.6/unit during the quarter. EBITDA increases by 7.5% yoy: Raw-material costs as a percentage of sales increased to 59.8% in 4QFY2012 compared to 55.7% in 4QFY2011. Average iron ore cost increased by 3.1% yoy and 7.8% qoq to `6,761/tonne in 4QFY2012. Hence, EBITDA increased only by 7.5% yoy to `138cr, while EBITDA margin contracted by 308bp yoy to 25.8%. Interest expenses increased by 34.2% yoy to `24cr, while other income increased by 97.5% yoy to `13cr. Consequently, net profit grew by 8.5% yoy to `83cr.
Shareholding Pattern (%) Promoters MF / Banks / Indian Fls FII / NRIs / OCBs Indian Public / Others 49.4 3.1 36.3 11.2
Power project delayed by six months: MIL plans capex of `1,500cr for its
upcoming power plants and `800cr for steel capacity expansion during FY2013. The implementation of the 1,050MW power plant at Angul has been delayed by six months and is now expected to be operational in 2HFY2014. Outlook and valuation: MIL is on the verge of a massive expansion in its steel business. The long-term stock performance will be determined by the timely expansion of the 1.5mtpa steel plant and unlocking of value in Monnet Power, which is implementing the 1,050MW power project. Although there could be some delays in the commencement of these projects, most of these projects would be backed by captive resources, thus ensuring robust profitability. Hence, we recommend Buy on the stock with a target price of `593. Key financials (Standalone)
Y/E March (` cr) Net sales % chg Adj. net profit % chg EPS (`) EBITDA margin (%) P/E (x) P/BV (x) RoE (%) RoCE (%) EV/Sales (x) EV/EBITDA (x)
Source: Company, Angel Research
3m
1yr
FY2011 1,570 6.0 281 (2.2) 43.7 28.6 10.3 1.4 14.9 9.2 2.8 9.6
FY2012E 1,901 21.1 306 8.9 47.6 26.3 9.5 1.2 13.8 7.7 2.5 9.7
FY2013E 2,989 57.3 383 25.1 57.2 23.7 7.9 1.1 15.1 9.2 1.7 7.3
FY2014E 3,625 21.3 446 16.3 66.5 25.9 6.8 0.9 15.3 11.7 1.3 5.0
Bhavesh Chauhan
Tel: 022- 39357800 Ext: 6821 bhaveshu.chauhan@angelbroking.com
Vinay Rachh
Tel: 022- 39357600 Ext: 6841 Vinay.rachh@angelbroking.com
Net sales Raw material % of net sales Staff cost % of net sales Other expenditure % of net sales Total expenditure % of net sales Operating profit OPM (%) Other operating income EBITDA EBITDA margin (%) Interest Depreciation Other income Exceptional items Profit before tax % of net sales Tax % of PBT Profit after tax
Source: Company, Angel Research
(` cr)
(` cr)
(%)
80 60 40 20 0 2QFY11 3QFY11 4QFY11 1QFY12 2QFY12 3QFY12 4QFY12 EBITDA (LHS) EBITDA margin (RHS)
15 10 5 0
40 30 20 10 0
(%)
50
Investment rationale
Steel expansion of 1.5mn tonnes: MIL is setting up a 1.5mn steel plant through the BF-EAF route. Total capex for the project is pegged at `3,600cr. Various plants including sinter plant, oxygen furnace, steel melting shop and plate mill are expected to begin progressive commissioning in mid-FY2013. However, full benefits of these facilities would be witnessed in FY2014. Significant value unlocking lies ahead in Monnet Power: MIL is setting up a 1,050MW (2x525) power plant through Monnet Power. The plant is being set up at a cost of `5,000cr, with equity contribution of `1,200cr and the balance being funded through debt. MIL has diluted a 12.5% stake to Blackstone for a consideration of `275cr, thus valuing the total equity stake at `2,200cr. We expect the plant to be operational in 2HFY2014. With captive coal blocks backing this project, we expect robust profitability from the power business. MIL also aims to raise its capacity further by 660MW. However, the company is yet to achieve financial closure for the same. Indonesian coal mine could provide further upsides: MIL had acquired two coal assets in Indonesia during CY2011, which has potential reserves of 65mn tonnes. MIL is currently in the process of developing this mine.
Angel
57.2 66.5
Bloomberg consensus
54.8 63.4
Variation (%)
4.4 5.0
(` cr)
Oct-08
Oct-09
Oct-10
Oct-11
Jan-09
Jan-10
Jan-11
Apr-08
Apr-09
Apr-10
Apr-11
Jan-12
Jan-12
Jan-12
2x
5x
8x
11x
14x
(`)
Oct-08
Oct-09
Oct-10
Oct-11
Jan-08
Jan-09
Jan-10
Apr-08
Apr-09
Apr-10
Jan-11
Apr-11
5x
10x
15x
20x
0.5x
Source: Bloomberg, Angel Research
1.0x
1.5x
2.0x
Apr-12
Jul-08
Jul-09
Jul-10
Jul-11
Apr-12
Jul-08
Jul-09
Jul-10
Jul-11
22 17 32
- Neutral 19,068
10
Key ratios
Y/E March Valuation ratio (x) P/E (on FDEPS) P/CEPS P/BV Dividend yield (%) EV/Sales EV/EBITDA EV/Total assets Per share data (`) EPS (Basic) EPS (fully diluted) Cash EPS DPS Book value DuPont analysis EBIT margin Tax retention ratio (%) Asset turnover (x) RoIC (Post-tax) Cost of debt (post tax) Leverage (x) Operating RoE Returns (%) RoCE (Pre-tax) Angel RoIC (pre-tax) RoE Turnover ratios (x) Asset turnover (gross block) Inventory (days) Receivables (days) Payables (days) WC cycle (days) Solvency ratios (x) Net debt to equity Net debt to EBITDA Interest coverage FY2009 FY2010 FY2011 FY2012E FY2013E FY2014E
9.9 7.3 1.7 1.1 2.0 8.1 1.1 47.4 45.4 61.9 5.0 268.2 20.0 79.7 0.7 11.2 4.6 0.7 15.7 12.4 16.2 18.2 1.2 80 26 50 49 0.7 2.3 4.4
10.1 6.8 1.5 1.1 2.2 6.9 1.0 56.1 44.7 65.9 5.0 307.1 26.5 81.8 0.5 11.5 4.3 0.4 14.8 13.0 17.3 18.2 1.1 112 32 60 49 0.4 1.6 5.3
10.3 8.2 1.4 1.1 2.8 9.6 0.9 47.3 43.7 55.2 5.0 324.8 23.9 77.8 0.4 8.0 1.6 0.7 12.4 9.2 14.8 14.9 1.1 141 44 78 68 0.7 3.2 8.6
9.5 7.6 1.2 1.1 2.5 9.7 0.8 47.6 47.6 59.3 5.0 366.5 22.3 77.1 0.4 6.9 1.7 0.8 11.3 7.7 11.7 13.8 0.8 135 40 75 74 0.8 3.9 6.2
7.9 5.8 1.1 1.1 1.7 7.3 0.8 59.5 57.2 77.8 5.0 420.2 19.8 77.1 0.5 8.2 2.7 0.8 12.8 9.2 11.8 15.1 0.8 125 35 70 57 0.8 3.2 4.5
6.8 4.8 0.9 1.1 1.3 5.0 0.7 69.3 66.5 93.7 5.0 483.6 21.5 77.1 0.6 10.2 5.0 0.6 13.2 11.7 13.8 15.3 0.9 120 32 60 57 0.6 1.9 3.3
11
E-mail: research@angelbroking.com
Website: www.angelbroking.com
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Disclosure of Interest Statement 1. Analyst ownership of the stock 2. Angel and its Group companies ownership of the stock 3. Angel and its Group companies' Directors ownership of the stock 4. Broking relationship with company covered
Monnet Ispat No No No No
Note: We have not considered any Exposure below ` 1 lakh for Angel, its Group companies and Directors
Ratings (Returns):
12