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P r i c i n g d i s c i p l i n e d r i v e s ma r g i n…
India Cement’s Q2FY12 results were in line with our estimate wherein net
sales were up 29% YoY (~3% QoQ) at | 1089.1 crore (I-direct estimate: |
1119 crore) and reported PAT at | 69.7 crore (I-direct estimate: | 64.3
crore) against a loss of | 33.6 crore in Q2FY11. However, cement sales
volumes remained sluggish and declined ~11% YoY (up ~5% QoQ)
mainly due to poor demand in Andhra Pradesh. Blended EBITDA/tonne
reported a noteworthy YoY growth to | 1038/tonne in Q2FY12 from |
105/tonne in Q2FY11 due to a significant jump in realisation by 45% YoY
(2% QoQ) to | 4487/tonne. Going ahead, we expect cement volumes to
remain muted during FY11-FY13E due to lower demand growth in the
southern region. EBITDA/tonne is expected to increase to | 960/tonne in
FY12E and | 986/tonne in FY13E.
ƒ Higher realisation offsets lower sales volume
Cement sales volumes decreased ~11% YoY (up 5% QoQ) to 2.43
MT due to continuous poor offtake across southern regions.
However, blended realisations significantly increased ~45% YoY
(~2% QoQ) to | 4487/tonne as players have maintained production
discipline across southern regions to offset a rise in cost.
ƒ Blended EBITDA/tonne improves to | 1038 (up ~885% YoY)
The EBITDA/tonne significantly improved ~885% YoY (down ~1%
QoQ) to | 1038 on the back of a sharp increase in realisation, which
negated the impact of a rise in the total cost/tonne. Thus, the OPM
has improved by 1973 bps YoY and 27 bps QoQ to ~23.1%.
V a l u a t i o n
At the CMP of | 71, the stock is trading at 8.1x and 6.8x its FY12E and
FY13E earnings, respectively. The stock is trading at an EV/EBITDA of 4.8x
and 3.9x FY12E and FY13E EBITDA, respectively. On an EV/tonne basis,
the stock is trading at $55 and $49 its FY12E and FY13E capacities,
respectively. We have valued the cement business at $55/tonne at its
FY13E capacity of 15.6 MT and the IPL franchise at | 13/share. We have
maintained our target price of | 84/share with a BUY rating.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
P r i c i n g d i s c i p l i n e d r i v e s ma r g i n…
India Cement’s Q2FY12 results were in line with our estimate wherein net
sales were up 29% YoY (~3% QoQ) at | 1089.1 crore (I-direct estimate: |
1119 crore) and reported PAT at | 69.7 crore (I-direct estimate: | 64.3
crore) against a loss of | 33.6 crore in Q2FY11. However, cement sales
volumes remained sluggish and declined ~11% YoY (up ~5% QoQ)
mainly due to poor demand in Andhra Pradesh. Blended EBITDA/tonne
reported a noteworthy YoY growth to | 1038/tonne in Q2FY12 from |
105/tonne in Q2FY11 due to a significant jump in realisation by 45% YoY
(2% QoQ) to | 4487/tonne. Going ahead, we expect cement volumes to
remain muted during FY11-FY13E due to lower demand growth in the
southern region. EBITDA/tonne is expected to increase to | 960/tonne in
FY12E and | 986/tonne in FY13E.
ƒ Higher realisation offsets lower sales volume
Cement sales volumes decreased ~11% YoY (up 5% QoQ) to 2.43
MT due to continuous poor offtake across southern regions.
However, blended realisations significantly increased ~45% YoY
(~2% QoQ) to | 4487/tonne as players have maintained production
discipline across southern regions to offset a rise in cost.
ƒ Blended EBITDA/tonne improves to | 1038 (up ~885% YoY)
The EBITDA/tonne significantly improved ~885% YoY (down ~1%
QoQ) to | 1038 on the back of a sharp increase in realisation, which
negated the impact of a rise in the total cost/tonne. Thus, the OPM
has improved by 1973 bps YoY and 27 bps QoQ to ~23.1%.
V a l u a t i o n
At the CMP of | 71, the stock is trading at 8.1x and 6.8x its FY12E and
FY13E earnings, respectively. The stock is trading at an EV/EBITDA of 4.8x
and 3.9x FY12E and FY13E EBITDA, respectively. On an EV/tonne basis,
the stock is trading at $55 and $49 its FY12E and FY13E capacities,
respectively. We have valued the cement business at $55/tonne at its
FY13E capacity of 15.6 MT and the IPL franchise at | 13/share. We have
maintained our target price of | 84/share with a BUY rating.
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