The company reported a 3% y-o-y jump in net sales to Rs309 million. However, they were below our expectation as Nitin Fire did not book sales from the new cylinder plant for tax planning purposes.
EBITDA was up 141% y-o-y due to lower base in the same quarter last year due to some provisions made by the company in the same quarter last year.
Adjusted PAT increased 181% y-o-y and the growth was faster than EBITDA growth mainly due to a reduced tax expenses.
We have revised our capacity utilization assumption to 45% and 60% from 55% and 75% for FY09 and FY10 respectively. We have also revised our earnings estimate downwards by 13% and 17% for FY09E and FY10E respectively to factor in lower utilization.
The stock is trading at 10.3x its FY09E earnings. We maintain our BUY rating on the stock with a revised price target of Rs663 (previous Rs780). The revision in price target will factor in downgrade in earnings due to slow ramp up of new factory.