HEG Result & Realization Analysis.

◘ HEG reported a topline of Rs. 1,587 crores with an EBITDA of Rs. 1,187 crores (EBITDA Margin of 74.84%) and a PAT of Rs. 770 crores for Q1 FY19.

◘ Assuming USD/INR rate of Rs. 68 for the quarter, following is a chart of utilisation level and realisation level for Q1 FY19 for HEG.

Estimated Realization at different Utilization levels

84% $ 13,885/Ton

85% $ 13,725/Ton

86% $ 13,565/Ton

87% $ 13,405/Ton

88% $ 13,255/Ton

89% $ 13,110/Ton

90% $ 12,960/Ton

◘ Research houses closely tracking HEG had estimated Q1 FY19 HEG PAT as follows:

PM Securities: Rs. 801 Crs. (Deviation of estimate from Actual: 4%)

Macquarie: Rs. 680 Crs. (Deviation of estimate from Actual: 13%)

ICICI Direct: Rs. 670 Crs. (Deviation of estimate from Actual: 14%)

Jefferies: Rs. 500 Crs. (Deviation of estimate from Actual: 54%)

Actual Q1FY19 PAT: Rs.770 Crs.

◘ We’d expected, utilisation levels of 86% and a realisation of $ 14,000 per ton for the quarter and had estimated a topline of Rs. 1,645 crores & EBITDA to Rs. 1,231 crores (74.8%) and a PAT of Rs. 801 crores in Q1 FY19.

◘For the Financial Year 2019E, we expect HEG to report a topline of Rs. 6639 crores with EBITDA of Rs. 4334 crores and a PAT of Rs. 2809 crores. Thus, currently at a price of 4,342/Share trades at a P/E of 6.3x & EV/EBIDTA of 4.05x FY19E which is still at a fair amount of discount compared to the valuation of the global peers.

◘ Conference Call to be held on 6th of August at 2:00 PM

To read our recent update on HEG visit: http://www.pmsec.in/blog/heg-q3fy18-concall-kta-s-rating-add

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