Graftech in its prospectus has also said that demand from this year is expected to go up by 100000 tonnes from this year on account of new EAF capacities getting commissioned in China. The increased supply will get absorbed if the numbers are to be believed.
In my opinion,
requisite adjustments should be made for purchasing power parity.
For Graftech’s valuation of around 3.5 Billion $-
Considering 1$= 12 Rs
Graphite India’s market capitalisation should be around 4000 Crores.
Considering 1$=20 Rs
Graphite India’s valuation should be around 7000 crores
Considering 1$=30 Rs
Graphite India valuation should be around 10000 crores.
Post adjustment for PPP Graphite India seems to be very fairly valued.
A commodity company that has ‘x’ capacity for ‘X’ product should be valued same regardless of PPP, as long as commodity price is same in both countries and its a global market with global supply-demand. PPP is already in the price of commodity where a low cost producer can flood the market and thereby affect a high-cost producer in a developed country. What we should be considering is only the capacity. If anything, I would think the capacity in developing country should be more expensive and not cheap since its going to be cheaper to run relatively and should have higher margins consequently for the same price of commodity.
Many thanks for the explanation. It’s much appreciated
From ICICIdirect report on moneycontrol.com - expected FY 18 Q4 performance of HEG and GI:
Graphite electrode players to report yet another stellar quarter…
We expect HEG, Graphite India to report a robust performance driven
by higher realisations. HEG’s topline is likely to increase 314.2% YoY,
26.7% QoQ while Graphite India’s topline is expected to increase
214.2% YoY and 25.7% QoQ. Higher realisations are expected to more
than offset the increase in raw material cost (needle coke). Thus, we
expect HEG and Graphite India to report EBITDA margins of 60.7% and
- So expected PAT (Q4) for HEG 434 crores, up 26.9% QoQ, with a rough TTM PE of 13 at CMP
- expected PAT for GI (Q4) 413 crores, up 21.3% QoQ, with a rough TTM PE of 16 at CMP
this is graftech’s pre ipo management roadshow… very informative and concise
The link does show blank despite registration . can you paste the screenshot or check the link and update
this is what i get when i click on the link…then just click on " management roadshow presentation ".
it is working for me.
Any news on Graphite electrodes? I see again sharp fall in shares of Showa Denka, Tokai Carbon etc.
Crude is nearing $75. All carbon in manufactured goods comes from crude. This should be a big negative for graphite electrode and carbon companies. Showa Denko is down 9% but Graphite India has opened in green which is a bit strange but then this was how it was the last time (when nomura report came out) when it fell big later in the day.
Disc: Exited Graphite India and HSCL recently, so views are biased.
Hearing Graphite is looking to convert this jackpot into buidling a 2-2.5 mn cement plant giving an EBIDTA of 200-240 Cr which will be a sticky business. No idea what HEG is planning to do.
where did you get this information from? what else did you pick up?
Graphite Electrodes - Sector Update - Centrum 26042018.pdf (651.1 KB)
Report on graphite electrodes from Centrum
Highlights: “Net sales for the quarter ended March 31, 2018 increased to $452 million, compared to $105 million in the first quarter of 2017. The improvement was primarily due to an increase in the weighted average realized price for graphite electrodes, which rose to $10,124 per metric ton (MT) in the current quarter, compared to $2,288 per MT in the prior period. Sales volume was also up, increasing 4.9% to 43 thousand MT from 41 thousand MT in the prior period. These increases in weighted average realized price and sales volume were driven by robust demand for electrodes due to the strong growth in electric arc furnace steel manufacturing, combined with a constrained electrode supply due to reductions in electrode manufacturing capacity over the past several years and a limited supply of our key raw material, petroleum needle coke. Demand for our electrodes remains strong and is above the levels that we are able to supply.”
Based on graftech results, I presume that though the china started producing graphite electrodes (based on nomura report), the increasing electric arc furnace (better route for environment than classic blast furnace) will nullfy the new graphite production and can expect the demand will sustain. Also 10kUSD/ton is really good price realization. How the graphite industry handle the needle coke shortage is the primary concern.
Results for March 2018: