Graphite India nears new high in weak market;stock up 22% post Q4 results

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Shares of were trading 3% higher at Rs 891 per share, extending their 6% gain in the past three days on the in otherwise weak market, inching towards its all-time high price.

Shares of graphite makers was less than 2% away from its all-time high of Rs 908 touched on January 4, 2018 on the in intra-day trade.

Since May 11, 2018, post January-March quarter (Q4FY18) results, has outperformed the market by surging 22% after the company reported seven-fold jump in its net profit at Rs 4.54 billion in driven by improved realization and higher capacity utilization. It had profit of Rs 620 million in the same period last year. On comparison, the S&P Sensex was down 2% during the same period.

“The underlying growth was driven by a combination of higher volumes, price realizations and capacity utilizations which increased from 74% to 85% y-o-y. Despite the strong performance in FY2018, our revenue and margin growth was held back by the timing of the fulfillment of certain low price orders both in India and Germany. However, as these orders are mostly completed the benefit of the higher prices will be reflected in our current year financial performance,” K K Bangur, Chairman, said while announcing results.

Analysts at ICICI Securities maintain ‘buy’ rating on the stock and 12 month target price of Rs 1,000 per share.

“We continue to remain positive on Graphite India given the current demand-supply imbalance, which is likely to favour the domestic graphite players. We expect the company to report a topline growth of around 25% in FY18-20E. In terms of profitability, the increase in needle coke cost is likely to moderate the EBITDA margins to around 34-35% in FY19-20E,” the brokerage firm said in result update.