Rain Industries Ltd. share price target

Carbon segment under pressure, ACM is improving Earnings and SOTP reduced; Maintain Buy 3QCY18 EBITDA declined 26% QoQ to INR5.1b (22% miss), led by a sharp fall in the Carbon segment performance. Other segments, however, performed well. Finance cost was flat QoQ, but down 23% YoY due to refinancing of debt in January 2018. PAT (after MI) declined 41% QoQ (-29% YoY) to INR1.75b. Carbon lower volumes, prices and margins: CPC volumes declined 21% QoQ to 375kt, impacted by the pet coke import ban. EBITDA/t was down 17% QoQ...

Rain Industries Q2CY18 result was slightly ahead of our forecasts. Sales increased 15.1% QoQ to Rs38,126 mn led by higher CPC volumes. Although Carbon Products EBITDA/tonne fell 15.1% QoQ to $110; nevertheless, CPC volumes (a concern in Q1CY18) recovered 21.8% QoQ to 474 kt. Overall, EBITDA was better than our forecast at Rs7,017 mn (+8.5% QoQ) on better than expected Advanced Carbon Materials (ACM)...

Rain Industries reported weaker than expected Carbon Product segment volumes; segment EBTIDA/tonne declined modestly to $128 (-2.7% QoQ). Carbon Products EBITDA stood at Rs5,524 mn(+100.2% YoY, -3.5% QoQ).However, Advanced Materials EBITDA fell 40.7% YoY to Rs908 mn on maintenance shutdowns...

Carbon Products EBITDA/tonne at Rs8,426 (+125.6% YoY, +11.8% QoQ) was ahead of our forecast. Segment EBTIDA grew to Rs6.4 bn (+104.1% YoY, +1.2% QoQ) despite fall in volumes to 0.7 mn tonne (-9.2% YoY, -10.0% QoQ). In light of better than expected Carbon Products profitability and anticipated higher spreads for CPC/ CTP, we raise our CY18 margin estimates. We maintain BUY rating with a revised target price of Rs522 (earlier Rs418)....

Rain Industries' (RAIN) 4QCY17 EBITDA increased 2% QoQ (+58% YoY) to INR6.9b. Prices increased across products, but carbon product dispatches were impacted by shipment delays toward the end of the quarter. Adj. PAT increased 37% QoQ to INR3.3b, led by a lower effective tax rate (~21% v/s ~40% in 3QCY17). Exceptional charges include INR0.8b gain from reversal in deferred tax (due to US and Belgium tax rate changes), offset by INR1.1b toward refinancing and unabsorbed bond amortization charges.

Rain Industries reported significantly better than expected profitability in Q3CY17 results with EBITDA 43.5% above our estimate on the back of stronger than expected profitability in Carbon Products. Carbon Products EBITDA grew to Rs6.3 bn (+83.3% YoY, +58.3% QoQ). Segment...

CPC market tailwinds driving strong earnings growth Raising earnings and target price; Maintaining Buy Rain Industries (RAIN) reported very strong earnings growth, driven by structural changes in market dynamics for its carbon business. Consolidated EBITDA increased 49% YoY to INR6.7b, beating our estimate of INR5b by a wide margin, due to both stronger margins (USD118/t v/s est. of USD85) and volumes (475kt v/s est. of 425kt CPC volumes) in the carbon business. Chemical division was affected by fire at one of its plant in Europe, seasonally low demand and higher input prices. Despite...

Rain Industries Ltd. (RAIN), formerly known as Rain Commodities Ltd. is globally the leading producer of carbon products which are used in aluminum industry. RAIN was incorporated in 1974 and it is engaged in the business of manufacture and sale of Carbon products, Chemicals and Cement. The Carbon Products segment consists of Calcined Petroleum Coke (CPC), Coal Tar Pitch (CTP), Green Petroleum Coke (GPC), Co-generated Energy and other derivatives of Coal Tar distillation. The Chemicals business segment includes the downstream operations of company's carbon processing output into high value chemical products that are...

Sanjay Jain - Research Analyst (SanjayJain@MotilalOswal.com); +91 22 6129 1523 Dhruv Muchhal - Research Analyst (Dhruv.Muchhal@MotilalOswal.com); +91 22 6129 1549 Investors are advised to refer through important disclosures made at the last page of the Research Report....

We raise our estimates and target price to Rs144; Maintain BUY. Key Highlights and Investment Rationale Strong growth in Carbon Products continues: During Q2CY17, Carbon Products segment EBITDA stood at Rs4,002 mn (+6.8% QoQ, +19.2% YoY). Chemical and Cement segment profitability falls: Chemical EBITDA fell by 35.1% YoY to Rs465mn due to unfavourable forex exposure and higher raw material costs; segment margins are likely to improve from Q3CY17. Cement EBITDA also fell 42.5% YoY to Rs211 mn on lower volumes and higher costs....

EBITDA beat our expectations despite weak Cement profitability: Despite weak profitability from Cement segment (EBITDA down 47.9% on lower volumes and higher input costs), Rain's EBITDA was 11.3% higher than our estimates. Even Chemicals segment EBITDA increased 27.1% yoy to Rs544mn...

Strong growth in CPC: The key highlight of the Q4CY16 result was strong volume growth in Calcined petroleum coke (CPC) and strong outlook on CPC volumes by the company management for CY17.Even coal tar pitch (CTP) volumes grew by 23% YoY to 0.13 mn tonnes. Cement sales volumes...

Rain Industries Ltd. (Rain) is one of the largest producers of calcined petroleum coke (CPC) and coal tar pitch (CTP) in the world with operations spread across North America, Europe, India and Russia. Apart from large size, Rain has long standing relationships with suppliers to source the key raw materials green petroleum coke (GPC) and coal tar. During FY13-15, Rain's profitability was affected due to lower demand from its end customers (aluminium industry). Nevertheless, Rain took several initiatives including setting up a greenfield distillation unit in Russia, partially securing supply of raw material (coal tar) for its European CTP plants, setting up CPC blending facility in India, etc which is likely to push volumes and improve margins. Further, the company has nearly completed its capex cycle and is focused on deleveraging balance sheet and refinancing (to lower interest costs). These measures are...