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Century Plyboards (India) Ltd |
Results above estimates. Maintain BUY |
BUY
CMP: Rs 68 Target Price: Rs 80
n Q2FY11 PAT at Rs420 mn ahead of expectations (Rs276 mn) - led by better than expected profitability of cement & Plywood division
n Revenue (Rs3.41 bn) growth of +20.2%- aided by 36.1% growth in plywood & laminates (P&L) segment and 262% growth in Ferro alloys segment. Cement declines 5% yoy
n CPL commissions new CFS at Kolkata. 3X expansion in cement capacity by Q3FY12. Kick-start of volume led growth in cement and CFS in FY12 to drive 23% earnings CAGR
n Management examining proposal of de-merger of CPL into three entities-Valuations at PER of 7.4X FY12E earnings remain attractive. Maintain BUY with a target of Rs80
Plywood & ferro alloys division fuel revenue growth by 20.2%
Revenues for the quarter at Rs 3.41 bn (our est-Rs3.24 bn) have grown by 20.2%,
driven by a smart 36.1% growth in P&L segment, and a stupendous growth of 262% in
the ferro alloys segment. Ferro allows growth was driven in sharp rebound in ferro
prices which resulted in CPIL shifting to ferro production in stead of power generated
being sold outside. Cement segment (under CPL’s 70.48% subsidiary CMCL) registered
revenue decline of 5% as the benefits of 3.6% improvement in cement realisation
(Rs5290/ton) were negated by 8.4% decline in cement volumes. Volumes declined on
account of overloading ban imposed in NER and also because of sever monsoons.
EBIDTA growth of 12%yoy for the quarter
EBITDA at Rs688 mn (+12%) was better than our estimates of Rs537 mn on account of
better than expected profitability of cement & P&L division. EBIDTA growth was largely
driven by P&L division which reported 26.4% growth in EBIT. With improvement in ferro
alloys realization, ferro alloy division reported EBIT of Rs25 mn as compared to loss in
Q2FY10 as well as Q1FY11. Cement EBIT at Rs346 mn, though down 6.2% yoy and
11.8% qoq was ahead of estimates on account of higher than expected realizations.
Overall EBIDTA margins at 20.2% declined 147 bps yoy and 280 qoq.
Net profit +33% - helped by forex gains & lower tax rate
With appreciating rupee CPL has reported a forex gains (related to outstanding currency
exposure for raw material imports) of Rs 27.7 mn (as compared to Rs 0.5 mn gain
registered in Q2FY10). Tax rate was lower mainly on account of Rs84.4 mn of MAT
credit entitlement .Consequently net profit after minority interest at Rs 420 mn (our
estimates of Rs 276 mn), grew by 33.2% yoy.
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