Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
JK Cement’s (JKCem) Q3 results were below estimates
with net sales at Rs 4.73 bn (6.2% below our estimates of
Rs 5.05 bn), EBITDA at Rs 541 mn (18.9% below our
estimates of Rs 667 mn) and adjusted PAT at Rs 18 mn
(83.5% below our estimates of Rs 111 mn). EBITDA
margin at 11.4% was 178 bps lower than our estimates of
13.2%. We have downgraded EPS estimates by
51.6%/28.7%/10.3% for FY11E/FY12E/FY13E factoring
into lower despatches growth in Southern region due to
supply discipline by manufacturers. Consequently, our
target price has been revised downwards to Rs179
against Rs 192 earlier. We maintain Buy rating on the
stock.
Results below estimates: Net sales at Rs 4.73 bn was
6.2% below our estimates due to lower than expected
grey cement realization of Rs 2,935/tonne (our
estimates: Rs 3,025/tonne) and lower revenues of Rs 1.21
bn (our estimates: Rs 1.37 bn) from white cement and
putty segment. EBITDA at Rs 541 mn was 18.9% below
our estimates and PAT at Rs 18 mn was 83.5% below our
estimates of Rs 111 mn.
EPS estimates revised downwards: We have
downgraded our EPS estimates for the company by
51.3% to Rs 2.9 for FY11E, 28.8% to Rs 9.1 for FY12E and
10.3% to Rs 13.8% for FY13E factoring lower than earlier
anticipated sales volume. Our EPS estimates for FY11E
and FY12E are 87.9% and 71% lower than Bloomberg
consensus estimates of Rs 24.2 and Rs 31.4 respectively
for FY11E and FY12E.
Reiterate Buy: At CMP, the stock trades at 5.1x FY13E
EV/EBITDA and USD 56.6 FY13E EV/Tonne. We maintain
Buy with a revised price target of Rs 179 (6.8% lower
than earlier target price of Rs 192), valuing the stock at
EV/ton of US$71.
Result below estimates
JKCem’s Q3FY11 results were below our estimates with net sales at Rs 4.73 bn (6.2% below our
expectations of Rs 5.05 bn), EBITDA at Rs 541 mn (18.9% below our estimates of Rs 667 mn) and
adjusted PAT at Rs 18 mn (83.5% below our expectations of Rs 111 mn). Grey cement sales volume
during the quarter was inline with our estimates at 1.2 MT, however, grey cement’s realization at Rs
2,935/tonne was 3% lower than our expectations of Rs 3,025/tonne. Revenue from white cement
and putty segment was at Rs 1,217.3 mn against our expectations of Rs 1,373 mn. EBITDA margin at
11.4% was 178 bps lower than our expectations of 13.2%. Lower than expected revenues resulted in
much lower than anticipated PAT of Rs 18 mn (83.5% lower than expectations of Rs 111 mn).
Adjusted PAT margin at 0.4% was 215 bps lower than our estimates of 2.5%.
Q3FY11 result review
Net sales of the company increased 10.3% YoY and 12.8% QoQ to Rs 4.73 bn. Sales volume (Grey and
white cement) was up 19.3% YoY and 10.2% QoQ to 1.29 MT. Grey cement sales volume increased
19.4% YoY and 8.9% QoQ to 1.2 MT led by commissioning of 3 MT new capacities in the Southern
region. Blended realization/tonne of cement declined 7.5% YoY to Rs 3,665/tonne, however, on a
sequential basis, there was an improvement of 2.3% QoQ. Grey cement realization was down 13.5%
YoY and 1% QoQ to Rs 2,935/tonne. White cement’s realization (including putty) increased 17% YoY
to Rs 13,012/tonne. EBITDA decreased 40.7% YoY to Rs 541 mn, however, on a sequential basis, it
increased 934.2% QoQ. EBITDA margin declined 985 bps YoY to 11.4% (up 1,018 bps QoQ) led by
increase in raw material costs (up 15.9% YoY), staff costs (up 8.3% YoY) and power & fuel cost (up
34.4% YoY). Blended operating cost increased 4% YoY to Rs 3,246/tonne. Blended EBITDA/Tonne
decreased 50.3% YoY to Rs 419/tonne (up 838.1% QoQ).
Depreciation was up 11.8% YoY to Rs 278 mn due to commissioning of new capacities. Other
income was down 25.5% YoY to Rs 31 mn. Interest expense increased 26.3% YoY to Rs 266 mn.
Effective tax rate in the quarter stands at 33.2% against 6% in Q3FY10. Adjusted PAT declined 96.1%
YoY to Rs 18 mn (loss of Rs 208 mn in Q2FY11). Adjusted PAT margin declined 1,045 bps YoY to
0.4%, however, on a sequential basis, there was an improvement of 535 bps.
Earning estimates revised downwards
We have downgraded our EPS estimates for the company by 51.3% to Rs 2.9 for FY11E, 28.8% to Rs
9.1 for FY12E and 10.3% to Rs 13.8% for FY13E factoring lower than earlier anticipated sales volume.
Outlook & Valuation
At the CMP of Rs 128, the stock is trading at a P/E of 14x FY12E and 9.3x FY13E EPS of Rs 9.1 and Rs
13.8 respectively. On EV/EBITDA basis, the stock is trading at 6.2x FY12E and 5.1x FY13E and on
EV/Tonne basis, it is trading at USD 59.3 FY12E and USD 56.6 FY13E respectively. The company is
trading at 21% discount to its mean EV/Tonne multiple on FY13E valuations. We feel that recent
diversification in the Southern region will benefit the company in longer term as its presence was
limited to the North earlier. We feel that the valuations on EV/Tonne basis are attractive at USD 59.3
FY12E and USD 56.6 FY13E considering its historical trading discount to large cap players like ACC
and Ambuja and mean EV/Tonne multiple of USD 71.5. Over the last five years, the stock has traded
at an average discount of 42.2% to ACC and 52.8% to Ambuja on a replacement cost basis, which at
present has widened to 53% and 60% respectively due to glut concerns. We maintain Buy on the
stock with a revised target price of Rs 179 (6.8% lower than earlier target price of Rs 192), which
gives an upside of 40% from its CMP. At our target price, the stock will trade at 13X FY13E EPS, 6.1x
EV/EBITDA, USD 67.4 EV/Tonne and P/BV of 0.9x.
Centrum vs. Bloomberg consensus estimates
Our earnings estimates for JKCem are significantly below Bloomberg consensus estimates for FY11E
and FY12E. Going forward, we feel that there could be a steep downwards revisions in consensus’
estimates, which may keep the stock price under pressure in near term.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
JK Cement’s (JKCem) Q3 results were below estimates
with net sales at Rs 4.73 bn (6.2% below our estimates of
Rs 5.05 bn), EBITDA at Rs 541 mn (18.9% below our
estimates of Rs 667 mn) and adjusted PAT at Rs 18 mn
(83.5% below our estimates of Rs 111 mn). EBITDA
margin at 11.4% was 178 bps lower than our estimates of
13.2%. We have downgraded EPS estimates by
51.6%/28.7%/10.3% for FY11E/FY12E/FY13E factoring
into lower despatches growth in Southern region due to
supply discipline by manufacturers. Consequently, our
target price has been revised downwards to Rs179
against Rs 192 earlier. We maintain Buy rating on the
stock.
Results below estimates: Net sales at Rs 4.73 bn was
6.2% below our estimates due to lower than expected
grey cement realization of Rs 2,935/tonne (our
estimates: Rs 3,025/tonne) and lower revenues of Rs 1.21
bn (our estimates: Rs 1.37 bn) from white cement and
putty segment. EBITDA at Rs 541 mn was 18.9% below
our estimates and PAT at Rs 18 mn was 83.5% below our
estimates of Rs 111 mn.
EPS estimates revised downwards: We have
downgraded our EPS estimates for the company by
51.3% to Rs 2.9 for FY11E, 28.8% to Rs 9.1 for FY12E and
10.3% to Rs 13.8% for FY13E factoring lower than earlier
anticipated sales volume. Our EPS estimates for FY11E
and FY12E are 87.9% and 71% lower than Bloomberg
consensus estimates of Rs 24.2 and Rs 31.4 respectively
for FY11E and FY12E.
Reiterate Buy: At CMP, the stock trades at 5.1x FY13E
EV/EBITDA and USD 56.6 FY13E EV/Tonne. We maintain
Buy with a revised price target of Rs 179 (6.8% lower
than earlier target price of Rs 192), valuing the stock at
EV/ton of US$71.
Result below estimates
JKCem’s Q3FY11 results were below our estimates with net sales at Rs 4.73 bn (6.2% below our
expectations of Rs 5.05 bn), EBITDA at Rs 541 mn (18.9% below our estimates of Rs 667 mn) and
adjusted PAT at Rs 18 mn (83.5% below our expectations of Rs 111 mn). Grey cement sales volume
during the quarter was inline with our estimates at 1.2 MT, however, grey cement’s realization at Rs
2,935/tonne was 3% lower than our expectations of Rs 3,025/tonne. Revenue from white cement
and putty segment was at Rs 1,217.3 mn against our expectations of Rs 1,373 mn. EBITDA margin at
11.4% was 178 bps lower than our expectations of 13.2%. Lower than expected revenues resulted in
much lower than anticipated PAT of Rs 18 mn (83.5% lower than expectations of Rs 111 mn).
Adjusted PAT margin at 0.4% was 215 bps lower than our estimates of 2.5%.
Q3FY11 result review
Net sales of the company increased 10.3% YoY and 12.8% QoQ to Rs 4.73 bn. Sales volume (Grey and
white cement) was up 19.3% YoY and 10.2% QoQ to 1.29 MT. Grey cement sales volume increased
19.4% YoY and 8.9% QoQ to 1.2 MT led by commissioning of 3 MT new capacities in the Southern
region. Blended realization/tonne of cement declined 7.5% YoY to Rs 3,665/tonne, however, on a
sequential basis, there was an improvement of 2.3% QoQ. Grey cement realization was down 13.5%
YoY and 1% QoQ to Rs 2,935/tonne. White cement’s realization (including putty) increased 17% YoY
to Rs 13,012/tonne. EBITDA decreased 40.7% YoY to Rs 541 mn, however, on a sequential basis, it
increased 934.2% QoQ. EBITDA margin declined 985 bps YoY to 11.4% (up 1,018 bps QoQ) led by
increase in raw material costs (up 15.9% YoY), staff costs (up 8.3% YoY) and power & fuel cost (up
34.4% YoY). Blended operating cost increased 4% YoY to Rs 3,246/tonne. Blended EBITDA/Tonne
decreased 50.3% YoY to Rs 419/tonne (up 838.1% QoQ).
Depreciation was up 11.8% YoY to Rs 278 mn due to commissioning of new capacities. Other
income was down 25.5% YoY to Rs 31 mn. Interest expense increased 26.3% YoY to Rs 266 mn.
Effective tax rate in the quarter stands at 33.2% against 6% in Q3FY10. Adjusted PAT declined 96.1%
YoY to Rs 18 mn (loss of Rs 208 mn in Q2FY11). Adjusted PAT margin declined 1,045 bps YoY to
0.4%, however, on a sequential basis, there was an improvement of 535 bps.
Earning estimates revised downwards
We have downgraded our EPS estimates for the company by 51.3% to Rs 2.9 for FY11E, 28.8% to Rs
9.1 for FY12E and 10.3% to Rs 13.8% for FY13E factoring lower than earlier anticipated sales volume.
Outlook & Valuation
At the CMP of Rs 128, the stock is trading at a P/E of 14x FY12E and 9.3x FY13E EPS of Rs 9.1 and Rs
13.8 respectively. On EV/EBITDA basis, the stock is trading at 6.2x FY12E and 5.1x FY13E and on
EV/Tonne basis, it is trading at USD 59.3 FY12E and USD 56.6 FY13E respectively. The company is
trading at 21% discount to its mean EV/Tonne multiple on FY13E valuations. We feel that recent
diversification in the Southern region will benefit the company in longer term as its presence was
limited to the North earlier. We feel that the valuations on EV/Tonne basis are attractive at USD 59.3
FY12E and USD 56.6 FY13E considering its historical trading discount to large cap players like ACC
and Ambuja and mean EV/Tonne multiple of USD 71.5. Over the last five years, the stock has traded
at an average discount of 42.2% to ACC and 52.8% to Ambuja on a replacement cost basis, which at
present has widened to 53% and 60% respectively due to glut concerns. We maintain Buy on the
stock with a revised target price of Rs 179 (6.8% lower than earlier target price of Rs 192), which
gives an upside of 40% from its CMP. At our target price, the stock will trade at 13X FY13E EPS, 6.1x
EV/EBITDA, USD 67.4 EV/Tonne and P/BV of 0.9x.
Centrum vs. Bloomberg consensus estimates
Our earnings estimates for JKCem are significantly below Bloomberg consensus estimates for FY11E
and FY12E. Going forward, we feel that there could be a steep downwards revisions in consensus’
estimates, which may keep the stock price under pressure in near term.
No comments:
Post a Comment