CMP Rs168, Target Rs210, Upside 24.9%
± Q1
FY12 revenue jumped 65.2% yoy to Rs98.6bn, above our expectation of
Rs94.7bn, aided by outperformance in international zinc division
± Improved performance in copper business was aided by increase in sales of by-products
± BALCO’s aluminium business EBIT decreased 18.4% qoq on account of rising input costs
± Zinc domestic division EBIT outperformance was largely due to higher silver content in concentrate sales
± Contribution from international zinc assets to the company’s consolidated EBIDTA increased from Rs4.4bn to 5.2bn
± Power
business EBIT margins were under pressure due to high coal costs; Power
cost of production under SEL increased from Rs2.34/unit in Q4 FY11 to
Rs2.86/unit
± Zinc to drive earnings over the next two years, maintain BUY with a 9-month price target of Rs210
