GRAPHITE INDIA REPORTED A MIXED SET OF NUMBERS FOR Q2FY23

News:

For Q2FY23, Graphite India’s consolidated capacity utilisation stood at 56% as compared to 82% in Q2FY22 and 71% in Q1FY23, lower than our estimate of 68%.For Q2FY23, Graphite India reported consolidated topline of Rs 825 crore, up 19% YoY, lower than our estimate of Rs 868 crore

·         Consolidated EBITDA for the quarter stood at Rs 102 crore, down 6% YoY, broadly in line with our estimate of Rs 100 crore. Consolidated EBITDA margin for the quarter stood at 12.4% as compared to 15.8% in Q2FY22 (our estimate of 11.5%)

·         The Russia - Ukraine conflict has led to high energy costs which have resulted in Graphite India’s German electrode operations becoming unviable. Hence the company decided to shut down the graphite electrode production at the German operation as of now and restructure the speciality and coating operations. During Q2FY23, exceptional item of Rs 45 crore represents provision on account of restructuring costs/social security cost and impairment of Property, Plant and Equipment of graphite division in Germany

·         During the quarter, consolidated other income stood at Rs 111 crore, up 41% YoY and 258% QoQ. Consolidated other income included an amount to the tune of Rs 74 crore on account of fair value gain on investments carried at Fair value through Profit and Loss  (FVTPL). The ensuing consolidated PAT for the quarter stood at Rs 92 crore, down 28% YoY (our estimate of Rs 96 crore)

Standalone operations                                                     

·         For Q2FY23, Graphite India’s standalone capacity utilisation stood at 64% as compared to 93% in Q2FY22 and 80% in Q1FY23. For Q2FY23, Graphite India reported standalone topline of Rs 719 crore, up 10% YoY

·         Standalone EBITDA for the quarter stood at Rs 103 crore, down 17% YoY. Standalone EBITDA margin for the quarter stood at 14.3% as compared to 19.0% in Q2FY22. For Q2FY23, the ensuing standalone PAT of Graphite India stood at Rs 139 crore, down 1% YoY

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 Graphite India (GIL) is the largest Indian producer of graphite electrodes by total capacity. Its manufacturing capacity is 98000 tonnes per annum. While GIL manufactures a full range of graphite electrodes, it stays focused on the higher margin, large diameter, ultra-high power (UHP) electrodes. The company is undergoing challenging times due to higher energy costs (especially in Europe).

Impact:

Neutral