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Higher other cost dents bottomline…
Birla Corporation reported net sales of | 589 crore, in line with our estimate
of | 580 crore, increasing ~23% QoQ on account of a better sequential
performance in the cement and jute segments. The EBITDA and reported
net profit of | 86 crore and | 63 crore was below our respective estimates of
| 145 crore and | 102 crore. This was on account of higher than expected
expenditure primarily due to one-time provision in other cost. During the
quarter, cement sales increased ~18% QoQ to | 516 crore aided by a 9%
QoQ increase in realisation and ~8% increase in sales volume. Cement
EBIT margin declined 120 bps QoQ as the increase in costs negated the
impact of a rise in realisation. Going forward, we expect margins to remain
under pressure on the back of rising input costs. We estimate EBIT per
tonne of | 460 per tonne in FY12E and | 549 per tonne in FY13E.
Cement volume up ~8% QoQ; realisation improves ~9% QoQ
Cement sales volumes increased ~8% QoQ to 1.57 MTPA on the back
of a pick-up in demand during the quarter. However, the volume
declined ~4% YoY. Cement realisation increased ~9% QoQ to | 3293
per tonne on account of a sharp increase in cement prices during the
quarter. The cement EBIT per tonne declined ~57% YoY to | 432 per
tonne but remained flat on a sequential basis.
Jute division sales surge ~188% YoY and ~83% QoQ
The jute division reported strong sales growth of ~188% YoY (83%
QoQ) to | 69.7 crore. The EBIT margin for the segment has
improved 570 bps QoQ to 3.2% in Q4FY11 from -2.5% in Q3FY11.
Valuation
At the CMP of | 354, the stock is trading at 8.5x and 11.2x its FY12E and
FY13E earnings, respectively. The stock is trading at an EV/EBITDA of 5.3x
and 7.4x FY12E and FY13E EBITDA, respectively. On an EV/tonne basis,
the stock is trading at $65 and $49 its FY12E and FY13E capacities,
respectively. We have valued the cement business at $50 per tonne (60%
discount to the current replacement cost of $125 per tonne) at its FY13E
capacity of 9.3 MTPA. We have maintained our target price of | 379 per
share on the stock with a HOLD rating
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Higher other cost dents bottomline…
Birla Corporation reported net sales of | 589 crore, in line with our estimate
of | 580 crore, increasing ~23% QoQ on account of a better sequential
performance in the cement and jute segments. The EBITDA and reported
net profit of | 86 crore and | 63 crore was below our respective estimates of
| 145 crore and | 102 crore. This was on account of higher than expected
expenditure primarily due to one-time provision in other cost. During the
quarter, cement sales increased ~18% QoQ to | 516 crore aided by a 9%
QoQ increase in realisation and ~8% increase in sales volume. Cement
EBIT margin declined 120 bps QoQ as the increase in costs negated the
impact of a rise in realisation. Going forward, we expect margins to remain
under pressure on the back of rising input costs. We estimate EBIT per
tonne of | 460 per tonne in FY12E and | 549 per tonne in FY13E.
Cement volume up ~8% QoQ; realisation improves ~9% QoQ
Cement sales volumes increased ~8% QoQ to 1.57 MTPA on the back
of a pick-up in demand during the quarter. However, the volume
declined ~4% YoY. Cement realisation increased ~9% QoQ to | 3293
per tonne on account of a sharp increase in cement prices during the
quarter. The cement EBIT per tonne declined ~57% YoY to | 432 per
tonne but remained flat on a sequential basis.
Jute division sales surge ~188% YoY and ~83% QoQ
The jute division reported strong sales growth of ~188% YoY (83%
QoQ) to | 69.7 crore. The EBIT margin for the segment has
improved 570 bps QoQ to 3.2% in Q4FY11 from -2.5% in Q3FY11.
Valuation
At the CMP of | 354, the stock is trading at 8.5x and 11.2x its FY12E and
FY13E earnings, respectively. The stock is trading at an EV/EBITDA of 5.3x
and 7.4x FY12E and FY13E EBITDA, respectively. On an EV/tonne basis,
the stock is trading at $65 and $49 its FY12E and FY13E capacities,
respectively. We have valued the cement business at $50 per tonne (60%
discount to the current replacement cost of $125 per tonne) at its FY13E
capacity of 9.3 MTPA. We have maintained our target price of | 379 per
share on the stock with a HOLD rating
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