ICICI Direct: Midhani Annual Report Analysis - Healthy Order Book Position
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ICICI Direct Report
Mishra Dhatu Nigam Ltd. reported a subdued set of Q1 FY21 numbers. Total operating income for the quarter was at Rs 113.5 crore (down 14% YoY), while Ebitda was at Rs 5.8 crore (down 84% YoY).
Ebitda margin for Q1 FY21 was at 5.1% compared to 27.4% in Q1 FY20. The company reported a loss at the profit after tax level of Rs 90 lakh for Q1 FY21 compared to profit after tax of Rs 21.9 crore in Q1 FY20.
Due to Covid-19 related shutdowns, the operations had to be scaled down for a considerable period in Q1 FY21.
Though operations resumed during the latter part of the quarter with limited availability of workforce and disrupted supply chain, the restriction imposed affected the company’s production, turnover and profit during Q1 FY21.
However, since the end of May 2020, Midhani’s operations have normalised. Going forward, backed by a healthy order book, we expect the company's performance to improve in upcoming quarters.
Within the defence segment, government’s initiative of indigenisation of imported spares will promote local sourcing and encourage import substitution.
This step will benefit the company, as it would encourage it to manufacture products locally, which were earlier imported thereby providing scope for developing new advanced product.
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