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Remarks: OPIL, a part of CK Birla group, is a diversified conglomerate operating in three segments; cement, paper and
fans. The cement division contributes over 53% of the total revenue. The company benefits due to its diversified
business model.
Due to the recent increase in cement prices, the present realisation of the company is higher by over 24%
over FY2011. The surge in the realisation will be able to offset the cost inflation and the profitability of the
division is likely to improve (marginally).
In the electrical division, due to the new product launches and gaining market shares, the company would
deliver over 11% revenue growth in FY2012. Going forward, the division can witness growth on the back of
lighting products (CFL) and household appliances.
The restructuring plan to demerge the cement division augurs well for the company as the uncertainty in the
profitability of the paper division was one of the major overhangs on the stock. Hence, the valuation could get
re-rated going ahead.
However, the key concern remains the poor volume offtake in its key market, ie Andhra Pradesh (which
accounts for 37% of the total dispatches).
At the current market price of Rs59, the stock trades at a PE of 5.6x and EV/EBIDTA of 4.1x, discounting its
FY2013 earnings estimate.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Remarks: OPIL, a part of CK Birla group, is a diversified conglomerate operating in three segments; cement, paper and
fans. The cement division contributes over 53% of the total revenue. The company benefits due to its diversified
business model.
Due to the recent increase in cement prices, the present realisation of the company is higher by over 24%
over FY2011. The surge in the realisation will be able to offset the cost inflation and the profitability of the
division is likely to improve (marginally).
In the electrical division, due to the new product launches and gaining market shares, the company would
deliver over 11% revenue growth in FY2012. Going forward, the division can witness growth on the back of
lighting products (CFL) and household appliances.
The restructuring plan to demerge the cement division augurs well for the company as the uncertainty in the
profitability of the paper division was one of the major overhangs on the stock. Hence, the valuation could get
re-rated going ahead.
However, the key concern remains the poor volume offtake in its key market, ie Andhra Pradesh (which
accounts for 37% of the total dispatches).
At the current market price of Rs59, the stock trades at a PE of 5.6x and EV/EBIDTA of 4.1x, discounting its
FY2013 earnings estimate.
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