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M a r g i n s s p u r t o n h i g h e r c e m e n t r e a l i s a t i o n …
Birla Corporation reported net sales of | 558 crore (decline of ~3% YoY,
~5% QoQ), in line with our estimate of | 537 crore. However, cement sales
were higher than our estimate on higher than expected cement realisation,
which came at | 3423 per tonne (our estimate: | 3243 per tonne). Increase
in cement realisations was led by rise in prices during March-April 2011.
Cement volumes remained muted during Q1FY12, increase of ~2% YoY
(decline of ~3% QoQ). EBITDA and reported net profit of | 148 crore and |
112 crore were ahead of our respective estimates of | 63 crore and | 48
crore, driven by lower than expected input cost coupled with higher cement
realisations. Cement EBIT margins improved ~1000 bps QoQ to 23%.
However, going forward, we expect margins to remain under pressure on
the back of rising input costs coupled with a fall in cement realisations.
ƒ Cement realisation gains ~4% QoQ, EBIT/tonne up ~82% QoQ
Cement sales volumes increased ~2% YoY to 1.52 MTPA. However,
they declined ~3% QoQ on the back of muted demand during the
quarter. Cement realisation increased ~4% QoQ to | 3423/tonne on
account of a sharp increase in cement prices during March-April 2011.
The cement EBIT/tonne improved significantly ~82% QoQ to |
788/tonne on the back of higher realisations.
ƒ Jute sales declines ~29% YoY, ~49% QoQ, loss at EBIT level
The jute division reported sales decline of ~29% YoY (49% QoQ) to
| 35.5 crore. At the EBIT level, the company reported loss of | 1.3
crore as against profit of | 2.2 crore in Q4FY11 on higher RM cost.
V a l u a t i o n
At the CMP of | 321, the stock is trading at 9x and 6.8x its FY12E and
FY13E earnings, respectively. The stock is trading at an EV/EBITDA of 5.9x
and 3.5x FY12E and FY13E EBITDA, respectively. On an EV/tonne basis,
the stock is trading at $57 and $42 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 assigned a BUY rating to the stock with a
revised target price of | 379 per share.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
M a r g i n s s p u r t o n h i g h e r c e m e n t r e a l i s a t i o n …
Birla Corporation reported net sales of | 558 crore (decline of ~3% YoY,
~5% QoQ), in line with our estimate of | 537 crore. However, cement sales
were higher than our estimate on higher than expected cement realisation,
which came at | 3423 per tonne (our estimate: | 3243 per tonne). Increase
in cement realisations was led by rise in prices during March-April 2011.
Cement volumes remained muted during Q1FY12, increase of ~2% YoY
(decline of ~3% QoQ). EBITDA and reported net profit of | 148 crore and |
112 crore were ahead of our respective estimates of | 63 crore and | 48
crore, driven by lower than expected input cost coupled with higher cement
realisations. Cement EBIT margins improved ~1000 bps QoQ to 23%.
However, going forward, we expect margins to remain under pressure on
the back of rising input costs coupled with a fall in cement realisations.
ƒ Cement realisation gains ~4% QoQ, EBIT/tonne up ~82% QoQ
Cement sales volumes increased ~2% YoY to 1.52 MTPA. However,
they declined ~3% QoQ on the back of muted demand during the
quarter. Cement realisation increased ~4% QoQ to | 3423/tonne on
account of a sharp increase in cement prices during March-April 2011.
The cement EBIT/tonne improved significantly ~82% QoQ to |
788/tonne on the back of higher realisations.
ƒ Jute sales declines ~29% YoY, ~49% QoQ, loss at EBIT level
The jute division reported sales decline of ~29% YoY (49% QoQ) to
| 35.5 crore. At the EBIT level, the company reported loss of | 1.3
crore as against profit of | 2.2 crore in Q4FY11 on higher RM cost.
V a l u a t i o n
At the CMP of | 321, the stock is trading at 9x and 6.8x its FY12E and
FY13E earnings, respectively. The stock is trading at an EV/EBITDA of 5.9x
and 3.5x FY12E and FY13E EBITDA, respectively. On an EV/tonne basis,
the stock is trading at $57 and $42 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 assigned a BUY rating to the stock with a
revised target price of | 379 per share.
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