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Mangalam Cement
H i g h e r c o s t s d e n t p r o f i t a b i l i t y …
Mangalam Cement reported net sales of | 125.2 crore and net profit of |
11.2 crore in Q1FY12, in line with our respective estimates of | 121.8
crore and | 11.1 crore. Due to muted demand, cement volumes
remained sluggish (declined ~15% YoY, ~12% QoQ). However,
realisations moved up during the quarter (~11% YoY, ~6% QoQ) after
the pricing discipline maintained by companies in the northern region.
Total cost increased ~18% YoY, which pulled down the EBITDA to |
614/tonne in Q1FY12. Going forward, cement volume & pricing will
remain muted in Q2FY12 & Q3FY12 due to onset of monsoon. We
expect EBITDA/tonne of | 667 in FY12E and | 689 in FY13E.
ƒ Cement volumes stay muted, price hikes lead to realisation growth
Mangalam Cement has reported blended sales volumes (cement &
clinker) of 0.36 MT, which declined ~15% YoY and ~12% QoQ due
to sluggish cement demand during the quarter. However, the
blended realisation increased ~11% YoY and ~6% QoQ to | 3498
per tonne on the back of higher cement prices in Q1FY12 led by
pricing discipline by the companies in the northern region.
ƒ EBITDA/tonne declines ~14% YoY on higher costs
The EBITDA/tonne declined ~14% YoY to | 614 in Q1FY12 mainly
due to higher employee and freight cost. However, the EBITDA per
tonne increased ~6% on a sequential basis as ~6% QoQ increase in
total cost was negated by the ~6% QoQ increase in realisation.
V a l u a t i o n
At the CMP of | 119, the stock is trading at 9.7x and 7.1x its FY12E and
FY13E earnings, respectively. It is trading at EV/EBITDA of 4.9x and 5.4x
FY12E and FY13E EBITDA, respectively. On an EV/tonne basis, the stock
is trading at $38 and $41 its FY12E and FY13E capacities, respectively. We
are maintaining our target price on the stock at | 139 with a BUY rating.
At our target price, the stock is trading at $45 per tonne (~65% discount
to replacement cost of $125 per tonne) at FY13E capacity of 3.25MT.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Mangalam Cement
H i g h e r c o s t s d e n t p r o f i t a b i l i t y …
Mangalam Cement reported net sales of | 125.2 crore and net profit of |
11.2 crore in Q1FY12, in line with our respective estimates of | 121.8
crore and | 11.1 crore. Due to muted demand, cement volumes
remained sluggish (declined ~15% YoY, ~12% QoQ). However,
realisations moved up during the quarter (~11% YoY, ~6% QoQ) after
the pricing discipline maintained by companies in the northern region.
Total cost increased ~18% YoY, which pulled down the EBITDA to |
614/tonne in Q1FY12. Going forward, cement volume & pricing will
remain muted in Q2FY12 & Q3FY12 due to onset of monsoon. We
expect EBITDA/tonne of | 667 in FY12E and | 689 in FY13E.
ƒ Cement volumes stay muted, price hikes lead to realisation growth
Mangalam Cement has reported blended sales volumes (cement &
clinker) of 0.36 MT, which declined ~15% YoY and ~12% QoQ due
to sluggish cement demand during the quarter. However, the
blended realisation increased ~11% YoY and ~6% QoQ to | 3498
per tonne on the back of higher cement prices in Q1FY12 led by
pricing discipline by the companies in the northern region.
ƒ EBITDA/tonne declines ~14% YoY on higher costs
The EBITDA/tonne declined ~14% YoY to | 614 in Q1FY12 mainly
due to higher employee and freight cost. However, the EBITDA per
tonne increased ~6% on a sequential basis as ~6% QoQ increase in
total cost was negated by the ~6% QoQ increase in realisation.
V a l u a t i o n
At the CMP of | 119, the stock is trading at 9.7x and 7.1x its FY12E and
FY13E earnings, respectively. It is trading at EV/EBITDA of 4.9x and 5.4x
FY12E and FY13E EBITDA, respectively. On an EV/tonne basis, the stock
is trading at $38 and $41 its FY12E and FY13E capacities, respectively. We
are maintaining our target price on the stock at | 139 with a BUY rating.
At our target price, the stock is trading at $45 per tonne (~65% discount
to replacement cost of $125 per tonne) at FY13E capacity of 3.25MT.
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