ValuePickr Forum

Godawari Power - Any Trackers?

Is there anyone in the group who is tracking Godawari Power and ILandFS Engineering ?

Godawari Power - The stock have fallen from 200 level to 50 level, however the book value is above 250. I looked at their last 2 quarter results but couldn’t figure what led to such a big change in their financials.

The stock belongs to Hira group.

ILandFS Engg - The order book is 3-4 times and have bagged many orders in the last 2 years. However the company is still reporting losses. Any signs of positive for this company ?

Tracking IL&Fs Engg. Though the order book is huge , they are not executed due to lack of capital. Plus huge debt. I personally dont think there is any positives in near term unless situations improves .
Discl : Was invested but sold out due to bad quarterly results one after another .

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Invested in GPIL, was biggest holding at one point, tremendous growth in past year, one has to be careful about cyclicals thoughx2 I do not see any downside yet, this is going to be big steel cycle lasting few more years, allizwell news till now for the company in particular, some long term mining linkages and materials supply tie-ups established, capacity looks to grow etc.

40% revenue are from iron ore pellets, seems mainly export market oriented. Market is bit shaken because of steel tariff issues, but I do not see China (main importer of materials and exporter of goods) trading with US. Of course, the steel from Korea, Japan etc. will get re-distributed and is already causing impact, also on India, I do not think the market will get shaken up that much to disturb GPIL’s cart.

I saw some ICICIdirect report also about a pretty high target. Edelweiss had a 400 target, which they have doubled now.

Company has been awarded 1,15,900 metric tonnes of Long-Term Coal Linkage to be used in the Company’s Sponge Iron Unit in the recently concluded Coal Linkage Auction made by Coal India Limited under auction of coal linkages in the sponge iron sub-sector (Tranche IV Scheme). With this additional quantity of coal linkage the aggregate quantity of coal linkage for Sponge Iron Division shall be 4,95,000 metric tonnes. In addition to this the Company has got 1,11,600 metric tonnes of coal linkage for its Gassifier Units, 98,064 metric tonnes of coal linkage for its Captive Power Plant and 13,900 metric tonnes of coal linkage for its Biomass Power Plant. Thus the total long term coal linkage awarded to the Company aggregates to 7,18,564 metric tones which fulfills the 80% of the total coal requirement of the Company.

CARE rating upgrade

Company has received approval of competent authority for private railway siding served by Mandhar Station of Raipur Division for inward traffic of Coal, Iron Ore & Manganese and outward traffic of Pellet, which has become operational w.e.f. 31st March, 2018

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Since 2016, Public shareholding has declined by 20%, from 35% to 28% of Total.

The 7% of Total share has been picked up by promoter 2.5% and by FIIs 4.5% (this in past 2 quarters, mainly in June 2018).

Some Jump in Volumes and prices since 16 August, Exchange query reply is “no news to report” from GPIL.
I guess positions are being built by Institutions ahead of Q2 etc.

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Fantastic results continue from the company -

The investor presentations are very detailed and transparent -

I liked the intent of the company to de-leverage in this upcycle. They seem to be clear and trying to sell few non-core assets too.

Risk - 1. Very high leverage 2. Cyclical - given the very low PE ratio, might be a trap.

Views Invited.

Disc: Invested

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They have a reasonably well maintained plant as well. Yes the industry is very cyclical, but current trends of prices are benign and expected to remain so. They pay about 60crs of interest quarterly and hence there should be some value generated as they repay their debt… Given the cycle is just about 18 months in the bullish territory - it may be presumed that the benign prices would continue for a while (although that’s quite difficult to predict). Need to keep an eye on the prices on monthly / quarterly basis and this is not a Buy & Forget stock! Anyway i think one of the better plays in the metals sector.

Disc: Invested (small proportion of portfolio)

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Demand is rising and prices are stable (see the article below). In the presentation Co. mentioned trend to continue for next two three years. Significant reduction in debt and Co. planning debt equity ratio less than 1… May be Mr. market not giving valuation due to concerns related to sustainability of prices/volume.

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Any idea about the present pellet prices??Is it the correct thing i am looking at? Any idea about the present prices?
As per screener

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current prices near 7000 (ex barbil)
source :

The company looks interesting. Despite the correction in pellet prices, a EBITDA margin of ~18-20% should be achievable for the company from a 2-3 years perspective, based on how things stand currently. The rejection of the merger by Jagdamba Power & Alloys is a negative though. The debt position, however will continue to be the most crucial metric to watch for.


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While the domestic iron ore prices are under pressure, the pellet prices (specially global prices) have remained steady and currently stand at 95-105$ per tonne as per public sources. With its current cost structure an EBITDA per tonne of about Rs. 2000-2500 per tonne should be the base case scenario. I would not be surprised if the FY18 Q3 EBITDA margins come at around Rs. 3000 per tonne.

can the pellet prices go up to recent highs due to the incident in vale brazil


The results are out

  1. The EBIDTA margin came in at 23.77% for the quarter and 24.9% for the 9M-FY19
  2. Q3 PAT y-o-y is flat at Rs. 73.6 cr and margin of 8.1%
  3. The tax amount has increased yoy as deferred tax asset benefits have been exhausted

Overall a positive result, with an expected EPS of Rs. 73-74 for FY19

The average pellet realization was between Rs. 7,358- Rs. 7,502, which was on expected lines. Further the company feels vale incident and other global events, the pellet prices are likely to go up in or atleast stay firm for the next 1-2 years. I have given the link to the investor presentation.

On the debt front, they were required to pay Rs. 1.1 bn in FY19 and the company has said that it has already repaid long-term loans aggregating Rs. 1.86 bn in the 9m FY19. They are required to repay debt in the range of Rs. 1.3 bn - Rs. 1.4 bn annually for the next three years, add to this the annual finance cost of about Rs. 2.5 bn, which takes the overall debt servicing outflow to about Rs. 4.0 bn annually. On a conservative basis an EBITDA between Rs. 6.0 bn to Rs. 8.0 bn is expected for next 2-3 years, based on how things stand today.
All this makes the debt look sustainable, though I have tried keep my assumptions conservative, there is no reason why things may turn out to be completely different. Views invited.


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Overall a decent set of results. The company actually repaid debt of about Rs. 240cr in FY19 and wants to make a similar repayment of ~Rs. 200-250 cr in FY20 against the scheduled Rs. 100cr. The interest coverage ratio is about 3x now. The capacity utilization for pallets was stable and realizations for the quarter was about $100 per tonne. The global iron ore pallets prices look stable and are currently trading at about 110-120$ per tonne. My guess is that as long as the iron ore pallets prices do not fall below $100 per tonne, the company is going to do well.


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Another quarter of stable performance. While the iron ore pellet prices have fallen from the peak of 120$ to 108$ but the EBITDA margins have remained intact at 21%, due to commensurate fall in iron ore prices. Overall the outlook for pellet prices looks stable currently, I will be comfortable unless the prices fall below 100$. Godawari Green has turned profitable and credit rating of GPIL has been upgraded to investment grade. On the debt front the company has achieved 37% of its FY20 repayment schedule in Q1. The Q1 Consolidated EPS is at Rs.16.45. Trading at trailing PE of 2.4x. Views invited.



It was interesting to hear the lastest concall of GPIL. The management mentioned that they are trying to develop much higher grades of pellet and most probably it should happen over next 6 months. There is a substantial premium for such grade in international markets and if they are successful then the EBIDTA can increase by 250 Cr. They will be the first co from India to do this and one of the few globally.

Found an interesting article in ref to the same -


Hi Ayush - Is this likely to be a competitive advantage? If the price difference between the higher grade pellet and the normal pellet is significantly beneficial (vis-a-vis the investment required to make the transition - which i recall is not massive) - other steel companies should also be able to make the change… 250cr EBITDA improvement pa without a big investment (i think capex plan for FY20 is about 100-125cr) sounded too good to be true


I asked this question - the response was - that their mines are having deposits which are of very high grade iron ore (usually not common) and hence they are in this unique position.

Ofcourse, we need to see these things play out (as per discussion with few people…this has been an expectation for sometime but the co hasn’t been successful till now).

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Looking at present pellet price crash, it seems difficult to post such EBITDA even if they get success