BackReligare downgrades Tata Metaliks to HOLD
Religare downgrades Tata Metaliks to HOLD
Premium
Tata Metaliks (TML) has reported disappointing numbers for Q1FY09. While sales increased in line with our estimates at 49% year-on-year (y-o-y), net profit came in below expectations at Rs202 million vis-à-vis Rs256 million as estimated.
A sharp rise in iron ore and coke cost has adversely impacted the company’s performance, reducing profit growth. EBITDA margin for the quarter under review contracted 195bps to 10.6%. Operating profit thus grew at a slower pace of 26% y-o-y to Rs335 million, while declining by 15% quarter-on-quarter.
Although higher other income aided a 31% y-o-y growth in net profit, the sequential profits dipped 21% on rising costs.
We believe the going is getting tougher for the company due to strong external negative influences. We have downgraded the stock to HOLD with a reduced target of Rs176, which reflects the negative impact of higher raw material costs on our earnings estimates.
Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!
