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Challenging FY12 ahead
UTCEM reports flat volume growth; realisations drive sales
Consolidated net profit beat on tax reversal & high other income
EBITDA/t up on q-q basis, higher coal price to reflect from 1Q12
Reiterate REDUCE on expensive valuations, negative sector view
Vols flat; realizations to rescue
UTCEM reported flattish volume growth
y-y given higher exposure to weak south
and north regions. On a like-for-like basis
(assuming inclusion of Samruddhi to
UTCEM in 4Q10) it reported sales and
EBIT (including other income) increases
of 6.7% y-y and 5.5% y-y respectively.
UTCEM reported consolidated net profit of
INR6.9b, 47% higher than our estimate,
aided by tax provision reversal of
INR1.15b in 4Q11 and higher-thanestimated
other income. Excluding these,
net profit would have been INR5.24b –
our estimate was INR4.63b.
EBITDA/t up INR209/t q-q, coal price hike from 1Q12
Driven by price co-operation among cement vendors, ASPs increased
7% q-q leading to a standalone EBITDA/t of INR962.5 (up 28% q-q).
While UTCEM benefited from higher ASPs, the full impact of domestic
coal price hike (30% increase in March) has not been seen yet (power
and fuel declined INR44/t q-q). UTCEM saw a secular increase in RM
costs and other expenses which, however, were offset by the ASP
increase.
Capacity update – additional 9.2mt by FY14
UTCEM is planning to spend INR100b over the next three years to
expand cement capacity. UTCEM will add 9.2mt of new capacity by FY14
with a capex of INR56b, which includes clinkerisation and grinding plants
in Chhattisgarh and Karnataka along with bulk packaging terminals
across various states.
Expensive valuations, Reiterate REDUCE
UTCEM trades at an EV/EBITDA of 10.6x our FY12 EBITDA versus peer
group median at 9.3x on our and Bloomberg consensus numbers, and
15-year average EV/EBITDA of 5.5-6.0x. UTCEM trades at EV/t of
USD131.0/t. We reiterate our negative view on the Indian cement sector
due to muted demand growth, 20-25% oversupply, and rising commodity
costs (coal, packaging material and freight) for FY12.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Challenging FY12 ahead
UTCEM reports flat volume growth; realisations drive sales
Consolidated net profit beat on tax reversal & high other income
EBITDA/t up on q-q basis, higher coal price to reflect from 1Q12
Reiterate REDUCE on expensive valuations, negative sector view
Vols flat; realizations to rescue
UTCEM reported flattish volume growth
y-y given higher exposure to weak south
and north regions. On a like-for-like basis
(assuming inclusion of Samruddhi to
UTCEM in 4Q10) it reported sales and
EBIT (including other income) increases
of 6.7% y-y and 5.5% y-y respectively.
UTCEM reported consolidated net profit of
INR6.9b, 47% higher than our estimate,
aided by tax provision reversal of
INR1.15b in 4Q11 and higher-thanestimated
other income. Excluding these,
net profit would have been INR5.24b –
our estimate was INR4.63b.
EBITDA/t up INR209/t q-q, coal price hike from 1Q12
Driven by price co-operation among cement vendors, ASPs increased
7% q-q leading to a standalone EBITDA/t of INR962.5 (up 28% q-q).
While UTCEM benefited from higher ASPs, the full impact of domestic
coal price hike (30% increase in March) has not been seen yet (power
and fuel declined INR44/t q-q). UTCEM saw a secular increase in RM
costs and other expenses which, however, were offset by the ASP
increase.
Capacity update – additional 9.2mt by FY14
UTCEM is planning to spend INR100b over the next three years to
expand cement capacity. UTCEM will add 9.2mt of new capacity by FY14
with a capex of INR56b, which includes clinkerisation and grinding plants
in Chhattisgarh and Karnataka along with bulk packaging terminals
across various states.
Expensive valuations, Reiterate REDUCE
UTCEM trades at an EV/EBITDA of 10.6x our FY12 EBITDA versus peer
group median at 9.3x on our and Bloomberg consensus numbers, and
15-year average EV/EBITDA of 5.5-6.0x. UTCEM trades at EV/t of
USD131.0/t. We reiterate our negative view on the Indian cement sector
due to muted demand growth, 20-25% oversupply, and rising commodity
costs (coal, packaging material and freight) for FY12.
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