3Q FY3/08 results a tad lower than expectations:

Gujarat NRE Coke’s

(GNC) 3Q FY3/08 results were about 10% lower than our estimate on an operating basis because of lower sales volumes and about 17% lower on a net profit basis as a result of higher depreciation charges.

Strong results, but slightly below estimate: Net sales at Rs2.4bn was higher by 39% YoY, driven by an 8% increase in sales and 19% realisation growth. EBITDA at Rs843m grew by 296% YoY, and EBITDA per tonne of coke increased by 265%. Net profit at Rs500m increased by 263%.

12-month price target: Rs212.00 based on a DCF methodology.

Maintain outperform: We maintain our Outperform rating and target price.

The business environment remains strong and the consensus in becoming bullish on coking coal in line with our view; we expect this to lead to a re-rating of the stock.

SOURCE:

Macquarie Research Equities, 21 January 2008