Graphite India Q2 Review - Performance Set To Improve Going Forward: ICICI Direct
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ICICI Direct Report
Graphite India Ltd. reported a muted set of numbers for Q2 FY22. For the quarter, Graphite India reported consolidated capacity utilisation of 81% compared to 60% in Q2 FY21 and 75% in Q1 FY22 (our estimate 78%). Consolidated topline for the quarter was at Rs 692 crore, up 43% YoY and 13% QoQ (our estimate: Rs 712 crore).
Consolidated Ebitda was at Rs 109 crore, down 23% QoQ. Consolidated Ebitda margin came in at 15.8% compared to 23.1% in Q1 FY22. Ensuing consolidated net profit during the quarter was at Rs 128 crore, down 15% QoQ.
Key triggers for future price performance:
During the quarter ended September 2021 (Q3 CY21), global steel production excluding China registered a strong increase of 15.3% YoY but was down 2.7% QoQ. Chinese steel production for the quarter declined 14.2% YoY and 16.6% QoQ, in line with their strategy to keep steel output at 2020 levels as a part of their goal to reduce carbon emissions. With the decline in steel production and exports from China, there may be a gradual increase in steel production from EAF steel producing countries, which augurs well for both graphite electrode demand and realisations.
During quarter ended September 2021, Indian steel production increased 9.5% YoY and 3.2% QoQ. The Indian steel demand outlook for the remaining part of the year looks encouraging with the pick-up in demand from Infrastructure and construction sector. With the improved demand scenario, an uptick was witnessed in graphite electrode prices but needle coke prices also continue to rise in tandem.
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