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Nirmal Bang is inviting you to a Zoom webinar.
When: Jul 14, 2021 08:45 AM India
Topic: Morning Market Update
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After registering, you will receive a confirmation email containing information about joining the webinar.
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*Tata Metaliks (TML) 1QFY22 results first cut: Record EBITDA due to record Pig iron realisation and sales*
*_CMP: Rs1202 | Mcap: Rs37.95bn | Rating: BUY_*
*Revenue:* Rs 6bn, +187% yoy; -9% qoq and 7% above our estimates; Gains of robust pig iron realisations and record sales partially offset by lower DI pipe volumes
*PI sales* volume: 89kt, +177% yoy; +11% qoq due to 17kt of exports this quarter and Realisation at Rs 42,487; +52% yoy,+5% qoq due to a combination of multiple price hikes.
*DI pipe* sales volume: 50kt, +84% yoy; -33% qoq was impacted by pandemic led labor restrictions at plant and Realisation at Rs 45,100; +1% yoy, flat% qoq. Realisations for the new DI pipe order has been seeing 25% hike due to stromg demand
RM cost/tonne: Rs21,722; +13% yoy and flat% qoq due to Iron ore cost inflation partly offset by reduced prices of Third party Coke and captive coke
*EBITDA:* Rs 1.54bn; +1400% yoy; +7% qoq; EBITDA margins of 25.5% vs 5% yoy; 22% qoq due to robust pig iron spreads and sales; *PI EBITDA/t: Rs10,553 vs Rs8,000 qoq *
PAT: Rs947mn; vs. loss of Rs124mn yoy; +26% qoq
*Order book:* 14months
*Expansion projects:* New Coke oven is running at full utilisation. *DI pipe expansion will be commissioned in 4QFY22.*
*Our view:* We believe that TML will continue to outperform in 2QFy22 with higher DI pipe volumes partially offset by higher RM cost. 2HFY22 will see some pressure pof high coking coal prices which should be majorly offset by higher realisation of DI pipe on new orders and power cost benefits. We continue to remain positive on TML.
*_CMP: Rs1202 | Mcap: Rs37.95bn | Rating: BUY_*
*Revenue:* Rs 6bn, +187% yoy; -9% qoq and 7% above our estimates; Gains of robust pig iron realisations and record sales partially offset by lower DI pipe volumes
*PI sales* volume: 89kt, +177% yoy; +11% qoq due to 17kt of exports this quarter and Realisation at Rs 42,487; +52% yoy,+5% qoq due to a combination of multiple price hikes.
*DI pipe* sales volume: 50kt, +84% yoy; -33% qoq was impacted by pandemic led labor restrictions at plant and Realisation at Rs 45,100; +1% yoy, flat% qoq. Realisations for the new DI pipe order has been seeing 25% hike due to stromg demand
RM cost/tonne: Rs21,722; +13% yoy and flat% qoq due to Iron ore cost inflation partly offset by reduced prices of Third party Coke and captive coke
*EBITDA:* Rs 1.54bn; +1400% yoy; +7% qoq; EBITDA margins of 25.5% vs 5% yoy; 22% qoq due to robust pig iron spreads and sales; *PI EBITDA/t: Rs10,553 vs Rs8,000 qoq *
PAT: Rs947mn; vs. loss of Rs124mn yoy; +26% qoq
*Order book:* 14months
*Expansion projects:* New Coke oven is running at full utilisation. *DI pipe expansion will be commissioned in 4QFY22.*
*Our view:* We believe that TML will continue to outperform in 2QFy22 with higher DI pipe volumes partially offset by higher RM cost. 2HFY22 will see some pressure pof high coking coal prices which should be majorly offset by higher realisation of DI pipe on new orders and power cost benefits. We continue to remain positive on TML.
*NMDC Ltd* board of directors approved demerger of 3mn T steel plant under construction. The Demerged Undertaking would be vested with NMDC Steel Limited pursuant to the demerger. New equity shares of NMDC Steel Ltd would be issued to all the shareholders of NMDC Limited in the ratio of 1:1. *Positive*
*Tata Metaliks Ltd.* | *CMP* Rs. 1202 | *M Cap* Rs. 3798 Cr | *52 W H/L* 1374/462
(Nirmal Bang Retail Research)
*Result Improved* mainly on account of higher realisation in Pig Iron segment
Revenue from Operations came at Rs. 603 Cr (-8.8% QoQ, 187.2% YoY) vs QoQ Rs. 660.9 Cr, YoY Rs. 209.9 Cr
EBIDTA came at Rs. 153.5 Cr (7.3% QoQ, 1408% YoY) vs QoQ Rs. 143.1 Cr, YoY Rs. 10.2 Cr
EBITDA Margin came at 25.5% vs QoQ 21.7%, YoY 4.8%
Adj. PAT came at Rs. 94.9 Cr vs QoQ Rs. 75.2 Cr, YoY Rs. -12.2 Cr
Quarter EPS is Rs. 30
Share is trading at EV/EBITDA of 8.09x FY23E EBITDA
(Nirmal Bang Retail Research)
*Result Improved* mainly on account of higher realisation in Pig Iron segment
Revenue from Operations came at Rs. 603 Cr (-8.8% QoQ, 187.2% YoY) vs QoQ Rs. 660.9 Cr, YoY Rs. 209.9 Cr
EBIDTA came at Rs. 153.5 Cr (7.3% QoQ, 1408% YoY) vs QoQ Rs. 143.1 Cr, YoY Rs. 10.2 Cr
EBITDA Margin came at 25.5% vs QoQ 21.7%, YoY 4.8%
Adj. PAT came at Rs. 94.9 Cr vs QoQ Rs. 75.2 Cr, YoY Rs. -12.2 Cr
Quarter EPS is Rs. 30
Share is trading at EV/EBITDA of 8.09x FY23E EBITDA
*Vedanta Business Update*
• *Aluminium*: The Lanjigarh refinery produced 0.48 mnt of alumina in Q1 FY22, 1% higher as compared to Q1 FY21 and 3% lower as compared to Q4 FY21. The Lanjigarh refinery continues to operate at over 1.9 Mtpa production run rate.
The cast metal aluminium production at in Jharsuguda and BALCO stood at 0.55 mnt in Q1 FY22, higher by 17% in comparison to Q1 FY21, mainly due to ramp-up of pots. The production was higher by 3% in comparison to Q4 FY21.
• *Oil & Gas:* Average gross operated production during Q1 FY22 across its assets were 164,899 barrels of oil equivalent per day (boepd), up 4% compared to Q1 FY21 and at similar levels as compared to Q4 FY21. The ramp up of gas volumes, commissioning of Aishwariya Barmer Hill facility and the impact of polymer injection in Bhagyam and Aishwariya fields enabled to offset the natural field decline.
• *Iron Ore:* Saleable Ore production volume in Q1 FY22 was 1.4 mnt, higher by 53% as compared to Q1 FY21 and 24% sequentially.
Pig iron production was at 0.202 mnt in Q1 FY22, higher by 85% as compared to Q1 FY21 and 29% sequentially.
• *Steel:* Total saleable production for Q1 FY22 was 0.29 mnt, higher by 8% as compared to Q1 FY21. In comparison to Q4 FY2021, total saleable production was down by 9% mainly due to instabilities and hanging issues at blast furnace.
• *Ferro Alloys Corporation Ltd (FACOR):* Ore production in Q1 FY22 was 3 times higher as compared to Q1 FY21 due to continuous operations of both mines. It is also more than double as compared to Q4 FY21.
The Company has achieved Ferro Chrome production of 18,000 tonnes in Q1 FY22 as against 15,000 tonnes in Q1 FY21, Quantities have improved due to continuous operations of Charge Chrome Plant with improved productivity. It was marginally lower than Q4 FY21 due to annual maintenance shutdown of the plant in the month of April 2021 for 7 days, post which plant productivity has improved by ~11%.
• *Copper- India:* Copper Cathodes Production was 65% higher in Q1 FY22 as compared to Q1 FY21. The production has dropped in Q1 FY22 by 20% as compared to Q4 FY21 largely due to sluggish domestic copper demand in the market impacted by the second COVID-19 wave.
• *Power:* Power sales were 2,722 million units higher by 48% yoy and 19% lower qoq
• *Aluminium*: The Lanjigarh refinery produced 0.48 mnt of alumina in Q1 FY22, 1% higher as compared to Q1 FY21 and 3% lower as compared to Q4 FY21. The Lanjigarh refinery continues to operate at over 1.9 Mtpa production run rate.
The cast metal aluminium production at in Jharsuguda and BALCO stood at 0.55 mnt in Q1 FY22, higher by 17% in comparison to Q1 FY21, mainly due to ramp-up of pots. The production was higher by 3% in comparison to Q4 FY21.
• *Oil & Gas:* Average gross operated production during Q1 FY22 across its assets were 164,899 barrels of oil equivalent per day (boepd), up 4% compared to Q1 FY21 and at similar levels as compared to Q4 FY21. The ramp up of gas volumes, commissioning of Aishwariya Barmer Hill facility and the impact of polymer injection in Bhagyam and Aishwariya fields enabled to offset the natural field decline.
• *Iron Ore:* Saleable Ore production volume in Q1 FY22 was 1.4 mnt, higher by 53% as compared to Q1 FY21 and 24% sequentially.
Pig iron production was at 0.202 mnt in Q1 FY22, higher by 85% as compared to Q1 FY21 and 29% sequentially.
• *Steel:* Total saleable production for Q1 FY22 was 0.29 mnt, higher by 8% as compared to Q1 FY21. In comparison to Q4 FY2021, total saleable production was down by 9% mainly due to instabilities and hanging issues at blast furnace.
• *Ferro Alloys Corporation Ltd (FACOR):* Ore production in Q1 FY22 was 3 times higher as compared to Q1 FY21 due to continuous operations of both mines. It is also more than double as compared to Q4 FY21.
The Company has achieved Ferro Chrome production of 18,000 tonnes in Q1 FY22 as against 15,000 tonnes in Q1 FY21, Quantities have improved due to continuous operations of Charge Chrome Plant with improved productivity. It was marginally lower than Q4 FY21 due to annual maintenance shutdown of the plant in the month of April 2021 for 7 days, post which plant productivity has improved by ~11%.
• *Copper- India:* Copper Cathodes Production was 65% higher in Q1 FY22 as compared to Q1 FY21. The production has dropped in Q1 FY22 by 20% as compared to Q4 FY21 largely due to sluggish domestic copper demand in the market impacted by the second COVID-19 wave.
• *Power:* Power sales were 2,722 million units higher by 48% yoy and 19% lower qoq
*Hindustan Zinc Business Update*
• *Mined Metal*: Production for Q1FY22 was up 9% at 0.22 mnt yoy vs 0.20 mnt on account of higher ore production largely at Rampura Agucha mines and Zawar mines. However it decreased 23% qoq due to lower ore production at Sindesar Khurd and Rampura Agucha mines.
• *Integrated Metal*: Production for Q1FY22 was up 17% at 0.24 mnt yoy vs 0.20 mnt but down 8% qoq vs 0.26 mnt on account of lower mined metal production.
• *Integrated Zinc*: Production for Q1FY22 was up 20% at 0.19 mnt yoy vs 0.16 mnt but down 4% qoq vs 0.195 mnt.
• *Integrated Lead*: Production for Q1FY22 was up 9% at 0.048 mnt yoy vs 0.045 mnt but down 21% qoq vs 0.061 mnt.
• *Integrated Silver*: Production for Q1FY22 was up 37% at 5.2 mn ounces yoy vs 3.8 mn ounces but down 21% qoq vs 6.5 mn ounces.
• *Mined Metal*: Production for Q1FY22 was up 9% at 0.22 mnt yoy vs 0.20 mnt on account of higher ore production largely at Rampura Agucha mines and Zawar mines. However it decreased 23% qoq due to lower ore production at Sindesar Khurd and Rampura Agucha mines.
• *Integrated Metal*: Production for Q1FY22 was up 17% at 0.24 mnt yoy vs 0.20 mnt but down 8% qoq vs 0.26 mnt on account of lower mined metal production.
• *Integrated Zinc*: Production for Q1FY22 was up 20% at 0.19 mnt yoy vs 0.16 mnt but down 4% qoq vs 0.195 mnt.
• *Integrated Lead*: Production for Q1FY22 was up 9% at 0.048 mnt yoy vs 0.045 mnt but down 21% qoq vs 0.061 mnt.
• *Integrated Silver*: Production for Q1FY22 was up 37% at 5.2 mn ounces yoy vs 3.8 mn ounces but down 21% qoq vs 6.5 mn ounces.