VN Corporate VN Research & Consulting VN Sourcing Practice IndiaNotes
 Like us on facebook  Follow us on twitter  Follow us on LinkedIn  IndiaNotes on Google Plus  IndiaNotes on Pinterest  IndiaNotes on Stumbleupon  Subscribe to our feeds


Stocks  A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z
Search
Feedback
You are here : IndiaNotes >> Research & Analysis >> Companies >> Nava Bharat Ventures Ltd. >> Research

Nava Bharat Ventures Q1FY13: High merchant realizations boost earnings

Edelweiss | Published: 10 Aug, 2012  | Source : ValueNotes.com | Follow Author | Add to my Favourites


Nava Bharat Ventures’ (NBV) Q1FY13 adjusted standalone earnings came in at Rs684mn, higher than Edelweiss' estimate of Rs511mn. Earnings from the power business were up due to higher merchant realization of ~Rs5/kwh (estimated Rs4/kwh) while the sustained performance of the ferro alloys division aided profits further. Commissioning of pipeline capacities and a scale up in Zambia mines will boost earnings, going forward. Maintain ‘BUY’ with target price of Rs290/share.


Adjusted PAT better than estimates

NBV’s standalone revenue at Rs2.7bn was in line with Edelweiss' estimates of Rs2.6bn though the adjusted PAT at Rs684mn (Rs33mn of forex losses) was better than their estimate of Rs511mn. Power segment performance was robust on the back of a better‐than‐expected net merchant realisation of ~Rs5/kwh during the quarter against their full year average estimate of Rs4/unit. While costs for the Ferro alloy division have gone up, realizations have also increased 18% YoY to Rs60K/t, improving the performance of the division. The management is guiding for a sale volume of 75KT of silico manganese and a 50KT conversion agreement with Tata steel.


Projects in pipeline on track

The under construction Orissa 64MW unit is expected to be synchronized in Q4FY13 post approval from the Orissa Power Transmission Company. Zambia coal mines have begun sale of high grade coal locally (sold ~6K tonnes, yielding PBT of @USD10/tonne in Q1) and are likely to scale up from 400KT in FY13 to 1MT by the end FY15. The older Orissa 64MW plant, which was under Section 11, has resumed operations and is selling ~20MW to GRIDCO and the balance on merchant (through the exchange).


Outlook and valuations: Near term trigger; maintain ‘BUY’

With the commissioning of Orissa 64MW project as the near term trigger and higher merchant prices tied up in the short term, Edelweiss expects earnings to be firm. At CMP of Rs191/share, the stock is trading at an attractive multiple of 7x and 6x FY13E and FY14E earnings respectively. Maintain ‘BUY’ with SOTP based TP of Rs290/share.



  Read full report Click here to read the full report

About Edelweiss

Edelweiss is one of the leading financial services company based in Mumbai, India. Its current businesses include investment banking, securities broking and investment management. They provide a wide range of services to corporations, institutional investors and high net-worth individuals.

 

For more information please write in to editor@indianotes.com

Disclaimer: The author has taken due care and caution to compile and analyse the data. The opinions expressed above are only the views of the author, and not a recommendation to buy or sell. Neither the author nor IndiaNotes.com accept any liability whatsoever arising from the use of any of the above contents.

logo
BSE
221.00 +11.40
(5.44%)
NSE
219.00 +9.60
(4.58%)
Read More


Technical Calls

What are technical calls?

Other Articles


Have a question?




Close ad
Avail instant loan on shares at 13% rate of interest!