Welcome to Scribd, the world's digital library. Read, publish, and share books and documents. See more
Download
Standard view
Full view
of .
Look up keyword
Like this
0Activity
0 of .
Results for:
No results containing your search query
P. 1
Mmtc Fpo Note

Mmtc Fpo Note

Ratings: (0)|Views: 0|Likes:
Published by Angel Broking
13th June, 2013
13th June, 2013

More info:

Categories:Types, Business/Law
Published by: Angel Broking on Jun 13, 2013
Copyright:Attribution Non-commercial

Availability:

Read on Scribd mobile: iPhone, iPad and Android.
download as PDF, TXT or read online from Scribd
See more
See less

06/13/2013

pdf

text

original

 
 
Please refer to important disclosures at the end of this report
 1 
Government of India is divesting 9,33,12,000 shares (9.33% stake) in
 
MMTC. Ithas set a floor price of
 ` 
60 (72% discount to CMP) for the OFS.
We recommendinvestors to AVOID subscribing to shares due to expensive valuation.
Company overview 
MMTC was established in 1963 and is the largest trading company in India andone of the major trading companies in Asia. It is a Mini Navratna company focusing on trading of commodities ranging form minerals to agro commodities.It deals in Precious metals, fertilizers, Coal and Hydrocarbons, Metals, Agroproducts and other minerals. MMTC also has a wholly owned subsidiary namedMMTC Transnational Pte Ltd (MTPL), Singapore and various joint venturesincluding a pig iron plant in which MMTC holds 49.8% stake.
Investment arguments
Mineral exports to remain muted:
The developments such as ban on iron oremining and export from Karnataka, regulation of export from eastern sector,increase in railway freight and higher export duty for exports, increase indomestic demand of ore iron ore etc have resulted in lower exports of iron ore inIndia during FY2012. As per Federation of Indian Mineral Industries (FIMI), ironore exports from India had declined by 38.5% yoy to 62mn tonnes duringFY2012 on account of export ban in Karnataka, stringent measures in issuingexport permits in Odisha, a sharp decline in international iron ore price andincreased export duty. Further, as per FIMI, total iron ore exports during FY2014are estimated to decline significantly, thus affecting top-line of MMTC.
 
Theincrease in domestic steel production capacity has also reduced the availability of Chrome and Manganese Ore for exports. Moreover, export duty on chromeore has increased beginning March 2012 from
 ` 
3,000/tonne to 30% ad valoremwhich is likely to impact MMTC’s FY2014 sales volumes. Even gold imports intoIndia are likely to be lower due to increase in customs duty on gold by thegovernment. This is further likely to hit MMTC’s top-line going forward.
Historical financials highly volatile
: The company’s financial performance hasbeen inconsistent and erratic over the past few years. During FY2012, itsconsolidated adjusted net profit declined by 62.0% yoy to
 ` 
43 cr. During FY2013,it reported a net loss of
 ` 
71cr on a standalone basis due to 56.9% decline in top-line (The company has not reported consolidated FY2013 results). The pastfinancials of the company do not indicate stability in earnings going forward.
Valuation:
MMTC is a trading company with a 'Five Star Export House' status.However, at the current price, the stock is trading at a very expensive valuation of398x FY2012 PE due to low free float (0.67% of its market cap). Even at a floorOFS price of
 ` 
60, it is trading at FY2012 PE of 113x, which is very expensive inour view.
Hence, we recommend investors to AVOID subscribing to MMTC OFS.
Bhavesh Chauhan
Tel: 022- 39357800 Ext: 6821bhaveshu.chauhan@angelbroking.com
Vinay Rachh
Tel: 022- 39357600 Ext: 6841vinay.rachh@angelbroking.com
 
MMTC
Expensive valuation despite huge discount
FPO | Metals
June 12, 2013
 
 
Metals |
 
FPO
June 12, 2013
 2
Profit & loss statement (Consolidated)
Y/E March (
`
cr) FY2009FY2010FY2011FY2012Net Sales
37,83245,61469,61367,022
% chg
39.720.652.6(3.7)
Total Expenditure
37,72845,50369,52767,078
EBIDTA
10411186(56)
(% of Net Sales)
0.30.20.1-0.1
Other Income
841669510709
Depreciation & Amortisation
13141414
Interest
687416399590
PBT
24535018449
(% of Net Sales)
0.60.80.30.1
Extraordinary Expense/(Inc.)
----
Tax
81120716
(% of PBT)
33.134.138.813.1
PAT
16423111243
% chg
(21.1)40.7(51.4)(62.0)
Adj. PAT
23125029103
% chg
(21.6)8.0(88.3)252.8
 
 
 
Metals |
 
FPO
June 12, 2013
 3
Balance sheet (Consolidated)
Y/E March (
`
cr) FY2009FY2010FY2011FY2012SOURCES OF FUNDS
Equity Share Capital
5050100100
Reserves & Surplus
1,3331,5191,4671,596
Shareholders’ Funds
1,3831,5691,5671,696
Share warrants
----
Minority Interest
----
Total Loans
4,3275,2406,2253,558
Other Liabilities
--130148
Deferred Tax Liability (net)
(30)(22)(34)(71)
Total Liabilities
5,6796,7877,8895,331
APPLICATION OF FUNDS
Gross Block
215227225261
Less: Acc. depreciation
738597110
Net Block
142142128151
Capital Work-in-Progress
2190134118
Goodwill
----
Investments
388440518608
Current Assets
10,10311,48218,85312,175
Current liabilities
4,9805,36711,8577,837
Net Current Assets
5,1236,1156,9954,338
Other assets
--114117
Misc Expenditure
6---
Total Assets
5,6796,7877,8895,331
 

You're Reading a Free Preview

Download
scribd
/*********** DO NOT ALTER ANYTHING BELOW THIS LINE ! ************/ var s_code=s.t();if(s_code)document.write(s_code)//-->