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Remarks: Madras Cement is a predominant player in the south region with an installed capacity of 12.5MMT. The
company will be the biggest beneficiary of the recent partial recovery in the cement offtake in the southern
region. Further, the supply discipline has resulted in strong realisation. We expect the earnings of the company
to grow by around 35% over FY2011-13.
The company has posted a volume growth of over 22% YoY for February 2012 and we believe the volume growth
along with the realisation growth would support the revenue growth in Q4FY2012.
To overcome the issue of power shortage in Tamil Nadu and to control the power cost the company is setting
up captive thermal power plants in Ariyalur and RR Nagar to meet the energy requirements. As per the plan a
60MW thermal power plant would be set up at Ariyalur (of this 40MW has already been commissioned and the
balance 20MW is expected in the near term) and a 25MW thermal power plant will be set up at RR Nagar.
The company is likely to be the biggest beneficiary of the sharp correction in the price of imported coal as it
imports 50-60% of its total coal requirement. So going forward, significant savings in the power and fuel costs
can be expected.
Any failure to adhere to supply discipline could be a key risk to the cement price and hence the same could
adversely affect the earnings of the company.
At the current market price of Rs153 the stock trades at PE of 9.4x its FY2013E earnings and an EV/EBIDTA of
5.8x on FY2013E.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Remarks: Madras Cement is a predominant player in the south region with an installed capacity of 12.5MMT. The
company will be the biggest beneficiary of the recent partial recovery in the cement offtake in the southern
region. Further, the supply discipline has resulted in strong realisation. We expect the earnings of the company
to grow by around 35% over FY2011-13.
The company has posted a volume growth of over 22% YoY for February 2012 and we believe the volume growth
along with the realisation growth would support the revenue growth in Q4FY2012.
To overcome the issue of power shortage in Tamil Nadu and to control the power cost the company is setting
up captive thermal power plants in Ariyalur and RR Nagar to meet the energy requirements. As per the plan a
60MW thermal power plant would be set up at Ariyalur (of this 40MW has already been commissioned and the
balance 20MW is expected in the near term) and a 25MW thermal power plant will be set up at RR Nagar.
The company is likely to be the biggest beneficiary of the sharp correction in the price of imported coal as it
imports 50-60% of its total coal requirement. So going forward, significant savings in the power and fuel costs
can be expected.
Any failure to adhere to supply discipline could be a key risk to the cement price and hence the same could
adversely affect the earnings of the company.
At the current market price of Rs153 the stock trades at PE of 9.4x its FY2013E earnings and an EV/EBIDTA of
5.8x on FY2013E.
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