 "Graphite India gains 6% on healthy operational performance in Q4")
Shares of Graphite India were up 6 per cent at Rs 646.85 on the BSE in intra-day deal on Tuesday after the company reported a consolidated profit after tax (PAT) of Rs 64 crore in the March quarter (Q4FY21), against a loss of Rs 7 crore in the year-ago quarter (Q4FY20).
Net sales of the company, however, declined 6 per cent year on year (YoY) at Rs 565 crore from Rs 602 crore in the previous year quarter. Reported consolidated Ebitda (earnings before interest, taxes, depreciation, and amortisation) came in at Rs 78 crore, while margin was at 13.8 per cent against analysts' estimates of 12.4 per cent.
Graphite reported operationally healthy Q4FY21 results. For consolidated operations, in terms of segments, after five quarters, the graphite and carbon segment reported a positive EBIT (earnings before interest and tax). Consolidated operational performance was also supported by a sharp drop in raw material costs. For Q4FY21, raw material cost as a percentage of sales was at 30 per cent vs. 69 per cent in Q4FY20 and 66 per cent in Q3FY21, ICICI Securities said in a note.
The management said, during Q4 FY2021, the electrode prices started to recover from the lows, resulting in inventory gains on account of net realizable value of inventory. On the other hand, our German business operations were impacted for most part of the year due to extended lockdown, lower capacity utilization and electrode pricing having remained under pressure in the European region.
The steel industry growth is underpinned by strong demand from the end user industries such as construction and automobile. In addition, China’s continuous focus on reducing energy consumption, abolition of VAT rebate on certain steel exports may lead to lower steel exports from China to rest of the world. These factors are expected to bode well for electric arc furnace (EAF) steel manufacturing countries and will drive demand for steel and electrode in the longer run.
Looking ahead, the management remains optimistic with the ongoing recovery in demand for electrodes and stabilization of prices. Graphite India is well positioned to cater to the growing demand for electrodes and maintain its strong liquidity and balance sheet position, they said.
Despite today’s gain, in the past one month, the stock of Graphite India has underperformed the market by falling 15 per cent, as compared to 2.7 per cent rise in the S&P BSE Sensex.
Net sales of the company, however, declined 6 per cent year on year (YoY) at Rs 565 crore from Rs 602 crore in the previous year quarter. Reported consolidated Ebitda (earnings before interest, taxes, depreciation, and amortisation) came in at Rs 78 crore, while margin was at 13.8 per cent against analysts' estimates of 12.4 per cent.
Graphite reported operationally healthy Q4FY21 results. For consolidated operations, in terms of segments, after five quarters, the graphite and carbon segment reported a positive EBIT (earnings before interest and tax). Consolidated operational performance was also supported by a sharp drop in raw material costs. For Q4FY21, raw material cost as a percentage of sales was at 30 per cent vs. 69 per cent in Q4FY20 and 66 per cent in Q3FY21, ICICI Securities said in a note.
The management said, during Q4 FY2021, the electrode prices started to recover from the lows, resulting in inventory gains on account of net realizable value of inventory. On the other hand, our German business operations were impacted for most part of the year due to extended lockdown, lower capacity utilization and electrode pricing having remained under pressure in the European region.
The steel industry growth is underpinned by strong demand from the end user industries such as construction and automobile. In addition, China’s continuous focus on reducing energy consumption, abolition of VAT rebate on certain steel exports may lead to lower steel exports from China to rest of the world. These factors are expected to bode well for electric arc furnace (EAF) steel manufacturing countries and will drive demand for steel and electrode in the longer run.
Looking ahead, the management remains optimistic with the ongoing recovery in demand for electrodes and stabilization of prices. Graphite India is well positioned to cater to the growing demand for electrodes and maintain its strong liquidity and balance sheet position, they said.
Despite today’s gain, in the past one month, the stock of Graphite India has underperformed the market by falling 15 per cent, as compared to 2.7 per cent rise in the S&P BSE Sensex.
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