PRAKASH INDUSTRY RESULTS REVIEW FY19-20 q1

PRAKASH INDUSTRY
RESULTS REVIEW

1. Net Sales 985Cr vs 650Cr [Up 51% YOY]
2. Operating Profit 240 Cr vs 108 Cr [ Up 122% YOY]
3. PAT 168Cr vs 59Cr [ Up 183%YOY]
4. EPS 10.75 vs 4.38 [Up 145% YOY]
5. 4/5 Marks due to increase in interest costs QOQ basis, and dilution of equity. Overall Good Results.

HIGHLIGHTS

1. The Company has achieved highest ever quarterly sales volume of around 2.4 lac tonnes in Q1 FY2019, registering growth of around 26% as against corresponding quarter of the last financial year. This was achieved as a result of better capacity utilization supported by steady supply of raw materials from coal linkages and long term supply agreements of high grade iron ore from Odisha.

2. Company has received Stage-I approval for diversion of Revenue Forest Land from Ministry of Environment, Forest & Climate Change for its Sirkaguttu Iron Ore Mine. The company is now proceeding with other required clearances, and steps are being taken to operate the mine by next month.

3. In the PVC pipes division the Flexible Packaging plant has been successfully commissioned to manufacture high performance barrier films and laminates that find application in packaging of food, beverages, oil, personal care and pharmaceutical products.


VALUATIONS
1.  Trading @ PE of 6.58, P/BV of 0.91.
2. DCF value of 303/- available @ MOS of 47%, the growth rate assumed is 7.5% and terminal growth rate of 4%
3. Tangible book value of 179/-, stock is trading under book value.
4. Stock is available @ dead cheap valuations, converted shares issued to promoters @ 212/-
5. Ben Graham Valuations of 280/- [Inclusive of 30% MOS]
6. Taking weightage of DCF, Ben Graham and P/BV valuations as 50:30:20 we arrived at an Intrinsic Value of 269/- The stock is a steal below 189 [30% MOS]
BUY FOR IMMEDIATE TGT OF 189 AND MED TERM TGT OF 280/-