Buy Graphite India; target of Rs 1400: ICICI Direct
ICICI Direct’s research report on Graphite India
Graphite India’s standalone operations reported a topline of Rs 1777 crore (up 406.3% YoY, 46.6% QoQ), higher than our estimate of Rs 1537.7 crore. EBITDA for the quarter was at Rs 1300 crore, higher than our estimate of Rs 995 crore. The EBITDA margin was at 73.2% (our estimate: 63.5%, Q1FY18: 10.1% and Q4FY18: 55.2%). Standalone PAT was robust at Rs 858 crore (vs. our estimate of Rs 662.7 crore) On a consolidated basis, the topline was at Rs 1965 crore (up 403.8% YoY, 48.5% QoQ). EBITDA came in at Rs 1436 crore. The corresponding EBITDA margin was at 73.1% (vs. Q4FY18: 54.4%, Q1FY18: 9.7%). Consolidated PAT was at Rs 957 crore.
We continue to value the stock at 10x FY20E EPS of Rs 140 and arrive at a target price of Rs 1400. We maintain our BUY recommendation on the stock. Graphite India has been one of the good wealth creators for investors with the stock price nearly multiplying ~6x since our Sector Update in July 2017.
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