MONNET ISPAT
Reco price: Rs 536
Target price: Rs 697
Monnet Ispat’s Q3FY11 revenue at Rs 350 crore declined 7 per cent YoY as contribution from power sales declined 40 per cent YoY due to reduced tariff. Operating margin expanded by 120bps YoY to 31.4 per cent. However, net profit at Rs 70 crore grew 3 per cent YoY on higher other income and lower interest. Steel sales declined 10 per cent YoY to 151kt on lower sales of steel (down 98 per cent YoY to 626 tonnes). The company has increased focus on steel production and expects to ramp-up output and sales in Q4. The company sold 210mn units of power at an average tariff/unit of Rs3.4 (Rs 4.9 in Q3FY10). With 1.4mntpa expansion by FY13, Monnet is on the path of transforming itself from primarily sponge iron maker to an integrated steel producer. This transition will boost Monnet's steel segment EBITDA by 54 per cent CAGR over FY10-12. Upgrade to buy.
— Pinc Research
MUNDRA PORT & SEZ
Reco price: Rs 129
Target price: Rs 191
Mundra Port and SEZ’s (MPSEZ) Q3 FY11 results were in line with expectation. Revenue for the quarter grew 33.4 per cent yoy to Rs450 crore, led by strong volume growth. Realisations (adjusted for contracting and SEZ revenue) were up about 16 per cent yoy. EBITDA margin for the quarter declined marginally by about 30bp to 68.7 per cent yoy due to higher operating expense( up 56 per cent to Rs1,09 crore). Interest expense, declined by 27 per cent yoy to Rs 36 crore. The effective tax rate was lower by about 500bp to 6.5 per cent . Net profit for the quarter grew by 40 per cent yoy to Rs230 crore. MPSEZ cargo volume grew by 26.2 per cent yoy to 12.4 MMT. Crude volumes for the quarter were negatively affected on account of the pipeline overhauling work being done in relation to capacity expansion at IOC’s Panipat refinery. Maintain buy.
Reliance Securities
