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H i g h e r c o s t s h u r t m a r g i n s …
Birla Corporation reported net sales of | 515 crore (up ~6% YoY, down
~8% QoQ), in line with our estimate of | 496 crore. However, the EBITDA
margin of 6.1% and net profit of | 26 crore were below our respective
estimates of 9.4% and | 36 crore on account of higher-than-expected
input costs, mainly power & fuel, raw material cost and other cost.
Average cement realisation for Q2FY12 declined sequentially led by a
correction in prices during July-August 2011. Also, cement volumes
remained muted during the quarter on low demand due to a slowdown in
construction activities. Cement EBIT declined sharply ~82% QoQ to |
172/tonne due to low realisation and higher costs.
ƒ Cement realisation declines ~5% QoQ, volume declines ~8% QoQ
Cement sales volumes remained flat YoY at 1.4 MTPA. However,
they declined ~8% QoQ on the back of muted demand during the
quarter. Cement realisation increased ~4% YoY to | 3246/tonne but
declined ~5% QoQ on account of a correction in cement prices
during the quarter.
ƒ Cement EBIT/tonne down 82% QoQ
Cement EBIT/tonne declined significantly by ~66% YoY and ~82%
QoQ to | 172/tonne on the back of low realisation and higher input
costs. Raw material cost increased due to an increase in clinker
purchase after limestone mining ban in the Chanderia unit. Other
cost increased as it includes ~| 14 crore of forex fluctuation loss.
V a l u a t i o n
At the CMP of | 321, the stock is trading at 11.7x and 9.4x its FY12E and
FY13E earnings, respectively. The stock is trading at an EV/EBITDA of 8.5x
and 5.8x FY12E and FY13E EBITDA, respectively. On an EV/tonne basis,
the stock is trading at $60 and $47 its FY12E and FY13E capacities,
respectively. We have valued the cement business at $50/tonne (60%
discount to the current replacement cost of $130/tonne) at its FY13E
capacity of 9.3 MTPA. We have assigned a BUY rating to the stock with a
revised target price of | 357/share.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
H i g h e r c o s t s h u r t m a r g i n s …
Birla Corporation reported net sales of | 515 crore (up ~6% YoY, down
~8% QoQ), in line with our estimate of | 496 crore. However, the EBITDA
margin of 6.1% and net profit of | 26 crore were below our respective
estimates of 9.4% and | 36 crore on account of higher-than-expected
input costs, mainly power & fuel, raw material cost and other cost.
Average cement realisation for Q2FY12 declined sequentially led by a
correction in prices during July-August 2011. Also, cement volumes
remained muted during the quarter on low demand due to a slowdown in
construction activities. Cement EBIT declined sharply ~82% QoQ to |
172/tonne due to low realisation and higher costs.
ƒ Cement realisation declines ~5% QoQ, volume declines ~8% QoQ
Cement sales volumes remained flat YoY at 1.4 MTPA. However,
they declined ~8% QoQ on the back of muted demand during the
quarter. Cement realisation increased ~4% YoY to | 3246/tonne but
declined ~5% QoQ on account of a correction in cement prices
during the quarter.
ƒ Cement EBIT/tonne down 82% QoQ
Cement EBIT/tonne declined significantly by ~66% YoY and ~82%
QoQ to | 172/tonne on the back of low realisation and higher input
costs. Raw material cost increased due to an increase in clinker
purchase after limestone mining ban in the Chanderia unit. Other
cost increased as it includes ~| 14 crore of forex fluctuation loss.
V a l u a t i o n
At the CMP of | 321, the stock is trading at 11.7x and 9.4x its FY12E and
FY13E earnings, respectively. The stock is trading at an EV/EBITDA of 8.5x
and 5.8x FY12E and FY13E EBITDA, respectively. On an EV/tonne basis,
the stock is trading at $60 and $47 its FY12E and FY13E capacities,
respectively. We have valued the cement business at $50/tonne (60%
discount to the current replacement cost of $130/tonne) at its FY13E
capacity of 9.3 MTPA. We have assigned a BUY rating to the stock with a
revised target price of | 357/share.
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