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M a r g i n s h u r t i n p a p e r & e l e c t r i c a l b u s i n e s s …
Orient Paper & Industries (OPIL) reported net sales of | 507 crore, which
was in line with our estimate of | 515 crore. The EBITDA margin of 11%
and net profit of | 24 crore was below our respective estimates of 19.3%
and | 57 crore. Cement revenues increased ~57% YoY to | 293 crore
aided by 54% YoY increase in realisation. Cement EBIT improved
significantly YoY to | 681/tonne. However, it declined ~44% QoQ due to
a rise in input costs. The paper business reported an EBIT loss of | 14.9
crore due to cost incurred for shutdown of its plants. The EBIT margin of
the electrical segment declined sharply to 1.9% (339 bps down YoY, 537
bps down QoQ) due to higher costs.
ƒ Net realisation increases ~54% YoY, cement volume declines QoQ
Cement sales volumes increased by ~2% YoY (decline ~7% QoQ) to
0.83 MT. Volumes were muted on account of sluggish demand due to
a slowdown in construction activities. Cement realisations increased
~57% YoY (flat QoQ) to | 3547/tonne. The cement EBIT/tonne
increased sharply on a YoY basis to | 681/tonne on account of
significant rise in realisation. However, it declined ~44% QoQ due to
an increase in input costs.
The electrical division reported net sales of | 137.3 crore (decline of
17% QoQ) and EBIT margin of 1.9% (~537 bps dip QoQ). The paper
business reported an EBIT loss of | 14.9 crore in Q2FY12 as against
a loss of | 3.4 crore in Q2FY11 and | 22.9 crore in Q1FY12.
V a l u a t i o n
At the CMP of | 62, the stock is trading at 6.8x and 5.9x its FY12E and
FY13E earnings, respectively. The stock is trading at an EV/EBITDA of 5.1x
and 3.9x FY12E and FY13E EBITDA, respectively. On an EV/tonne basis,
the stock is trading at $50 and $43 its FY12E and FY13E capacities of 5.4
MT and 8.1 MT, respectively. We have valued the stock at $50/tonne its
FY13E capacity of 8.1 MT, which is ~60% discount to the current
replacement cost of $130/tonne. We have maintained our BUY rating on
the stock with a revised target price of | 71/share
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
M a r g i n s h u r t i n p a p e r & e l e c t r i c a l b u s i n e s s …
Orient Paper & Industries (OPIL) reported net sales of | 507 crore, which
was in line with our estimate of | 515 crore. The EBITDA margin of 11%
and net profit of | 24 crore was below our respective estimates of 19.3%
and | 57 crore. Cement revenues increased ~57% YoY to | 293 crore
aided by 54% YoY increase in realisation. Cement EBIT improved
significantly YoY to | 681/tonne. However, it declined ~44% QoQ due to
a rise in input costs. The paper business reported an EBIT loss of | 14.9
crore due to cost incurred for shutdown of its plants. The EBIT margin of
the electrical segment declined sharply to 1.9% (339 bps down YoY, 537
bps down QoQ) due to higher costs.
ƒ Net realisation increases ~54% YoY, cement volume declines QoQ
Cement sales volumes increased by ~2% YoY (decline ~7% QoQ) to
0.83 MT. Volumes were muted on account of sluggish demand due to
a slowdown in construction activities. Cement realisations increased
~57% YoY (flat QoQ) to | 3547/tonne. The cement EBIT/tonne
increased sharply on a YoY basis to | 681/tonne on account of
significant rise in realisation. However, it declined ~44% QoQ due to
an increase in input costs.
The electrical division reported net sales of | 137.3 crore (decline of
17% QoQ) and EBIT margin of 1.9% (~537 bps dip QoQ). The paper
business reported an EBIT loss of | 14.9 crore in Q2FY12 as against
a loss of | 3.4 crore in Q2FY11 and | 22.9 crore in Q1FY12.
V a l u a t i o n
At the CMP of | 62, the stock is trading at 6.8x and 5.9x its FY12E and
FY13E earnings, respectively. The stock is trading at an EV/EBITDA of 5.1x
and 3.9x FY12E and FY13E EBITDA, respectively. On an EV/tonne basis,
the stock is trading at $50 and $43 its FY12E and FY13E capacities of 5.4
MT and 8.1 MT, respectively. We have valued the stock at $50/tonne its
FY13E capacity of 8.1 MT, which is ~60% discount to the current
replacement cost of $130/tonne. We have maintained our BUY rating on
the stock with a revised target price of | 71/share
