Comments
Centrum Broking
GMDC (Buy)
CMP: ₹119.30
Target: ₹150
Gujarat Mineral Development Corporation’s Ebitda stood 4.7 per cent above expectations at ₹126 crore as mining Ebit/t increased by 10 per cent y-o-y to ₹480/t on the back of lower expense for mining cost and CSR expenses. Volumes remained muted at 2 mt with production issues at Tadkeshwar and Rajpardi and muted volumes from Bhavnagar.
Discussion with management pointed to 1) volume guidance of 2.8 mt in Q4 and 13 mt in FY16E; 2) resolution of hard strata issue at Tadkeshwar in Q3; 3) additional contractors for Bhavnagar/ Tadkeshwar for increasing production likely to be finalised in Q4; 4) delays in start of production from Umarsar mine and pyrite removal plant at Bhavnagar which is now expected in February.
We reduce our volume estimates for FY15E/16E to 9/10.8 mt (vs 9.8/11.7 mt earlier) and also remove our price hike assumption for FY16E even though GMDC lignite’s discount to similar calorific value coal from imports/WCL still remains high. Maintain ‘Buy’ as risk-to-reward remains favourable. Risks to our call would be lower production, investments in low return projects.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.