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Outlier in Focus – Graphite India

GIL-Logo.png

Outlier in Focus – Graphite India
We come across a large number of interesting stocks in Capitalmind SNAP Outliers, our discovery tool for stocks with momentum. See a video of how Outliers works, and how to use Outliers to find all-time highs. Here’s a stock we found interesting that’s been an outlier. Catch them all here.


Outlier in Focus – Graphite India
Graphite India (GIL) manufacturer of Graphite Electrodes [manufacturing capacity of 80,000 tons per annum and used electric arc furnace (“EAF”) based steel mills along with being a consumable item for the steel industry] as well as Carbon and Graphite Specialty products [contributed 91% to FY2016 Sales] .
GIL has 4 manufacturing facilities [proximity to the three main ports of India offers logistic advantages] while the EU market while the foreign operations are looked at by the subsidiary based at Nuremberg, Germany with an Electrode capacity is 18,000 tons per annum.
Outlier in Focus – Graphite India
Graphite India is the largest Indian producer of graphite electrodes by capacity which accounts for 12.6% of the global electrode capacity [other players include GrafTech, SGL Group, Showa Denko, Tokai Carbon and HEG].
Outlier in Focus – Graphite India
Other products manufactured by the company includes Calcined Petroleum Coke [used in electrode manufacturing] & Carbon Electrode Paste, Glass Reinforced Plastic Pipes [used in pipelines for water supply, cooling towers, industrial process, seawater pipelines and gasoline storage] and High Speed Steel [largest producer in India and mostly used in the manufacturing of cutting tools such as drills, taps, milling cutters, reamers, hobs, broaches etc.] & Alloy Tool Steels.
Outlier in Focus – Graphite India
GIL also has a power generation capacity of 33MW through hydel and multi-fuel routes which is basically used as captive supply for the graphite electrodes business.

FY-2017 Financial Performance

Outlier in Focus – Graphite India

  1. Average capacity utilization was 74% in FY2017 as compared to 62% in FY2016 [the company is targeting a consolidated capacity utilization of around 85% for FY2018].
  2. Decreased operating profit due to lower electrode prices coupled with higher input costs
  3. Reduced borrowings has led to a fall in finance charges [fell from Rs. 9.46 crore to Rs. 7.89 crore]

Outlier History

Touching a month high of Rs. 125.5/-, the stock has now breached its all time high of Rs. 152.95/-.
Outlier in Focus – Graphite India

Valuation:

Graphite trades at a PE ratio of 27 times its 4 quarter trailing earnings. This is expensive given the low / single digit Return on Equity the stock has been seeing for quite a while now.

Stock Price

The stock has witnessed multiple breakouts just in the month of April with the price kissing the 52 week high of Rs. 170/-.
Outlier in Focus – Graphite India