EUR 4.64 For Business Accounts Only

ASTL: Second expansion to open up valuations; details awaited

• We await granular details of the second expansion project by ASTL, specifically the amount of outlay and debt/equity mix of the financing where management has already disclosed the size of expansion. Therefore, we are placing the stock under-review.

• The rerolling capacity will be upgraded to 750,000tons while the melting facility will reach upto 600,000tons targeted by the end of FY19. Incorporating this expansion, based on preliminary assumptions our TP may rise to PkR118/share but we await project details before releasing new estimates.

• The 3QFY17 results reflected an impressive growth in the sales of ASTL’s internally produced rebars. The gross margins sustained at around 19% level on ASTL’s own rebars for another quarter, owing to recent price increases to pass-on the effect of rising scrap prices.