Buy Ballarpur Industries: Emkay Global

Emkay Global Financial Services has maintained its buy rating on Ballarpur Industries, in its February 5, 2009. “BILT Q2FY09 results were below our expectations due to poor performance from rayon grade pulp (RGP) segment and SFI, Malaysia operations. BILT’s domestic performance remained stable. Consolidated sales declined by 6% YoY to Rs 6.5 bn, lower than our exp of Rs 7.6 bn. Paper sales volumes declined by 9% YoY (mainly due to fall in sales at SFI, Malaysia plant) while paper realisations increased by 5.4% (Rs 40,000 / mt). Paper segment margins improved by 120 bps to 20.1% however RGP segment reported losses. EBITDA margins declined marginally by 20 bps to 25.7%, resulting in 7% YoY decline in EBITDA to Rs 1.7 bn (we expected Rs 1.8 bn). APAT at Rs 459 mn was down by 38% YoY and below our estimates of Rs 644 mn. AEPS stood at Rs 0.7.”

“To factor weak RGP sales in H2FY09, we are reducing our FY09 EPS estimates by 12% to Rs 3.9 (previous Rs 4.5). However our FY10 estimates remain unchanged considering captive consumption of pulp. We are reducing our price target for the company by 35% to Rs 24 (previous Rs 37) based on 20% discount to its FY09 est book value of Rs 30 / share. We maintain our BUY recommendation on the stock, “says Emkay Global Financial Services’ research report.

source: Moneycontrol

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