East India Securities is bullish on I G Petrochemicals has recommended buy rating on the stock with a target price of Rs 199 in its research report dated June 28, 2020.
East India Securities' research report on I G Petrochemicals
4QFY20 Revenue of I G Petrochemicals Ltd (IGPL) de-grew by 14.2% YoY to Rs2685mn. This de-growth was due to decline in both volume and realization. Plant shutdown dAue to global pandemic impacted the volume. EBITDA margin witnessed a steep contraction of 570bps YoY to 6.0%. This was largely owing to increase in commodity prices that resulted in an increase in RM cost by about 375bps YoY to 79.9% of sales. Other expenses stood at 8.1% of sales, up ~60 bps YoY. The company reported one-offs of Rs55-60mn owing to inventory losses and COVID related provisions. Adjusting for one-offs, EBITDA margin stood at 8.0%. Overall, EBITDA reported a decline of 56.2% YoY to Rs160mn, owing to lower gross margins and operating deleverage. PAT reported decline of 78.1% YoY to Rs40mn with PAT margin of 1.5% which witnessed a contraction of 430bps.
Outlook
Currently, the stock is trading at FY22E P/E of 7.5x. We value the stock on a forward P/E multiple of 10x and arrive at target price of Rs 199 per share which offers 34% upside from current valuations.
For all recommendations report, click here
Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Read More
