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L o w e r c e m e n t v o l u m e s d r a g e a r n i n g s …
Orient Paper & Industries (OPIL) reported net sales of | 534 crore and net
profit of | 59 crore, in line with our respective estimates of | 547 crore and |
64 crore, respectively. During the quarter, cement sales increased ~11%
YoY (declined ~5% QoQ) to | 317 crore (our estimate: | 309 crore) aided by
29% YoY (5% QoQ) increase in realisation to | 3568 per tonne against our
expectation of | 3435 per tonne. Cement EBIT improved significantly by
~64% YoY (17% QoQ) to | 1230 per tonne. The paper business reported a
loss of | 22.9 crore at the EBIT level due to cost incurred for the plant
shutdown. Also, the company announced the demerger of its cement
business into Orient Cement (OCL), which will be listed on the exchanges
by April, 2012. OCL will have mirror shareholding as in OPIL.
ƒ Cement volume declines 14% YoY, realisation up 29% YoY
Cement sales volumes declined ~14% YoY (~10% QoQ) to 0.89 MT
on account of sluggish demand due to a slowdown in construction
activities. Cement realisations increased ~29% YoY and ~5% QoQ to
| 3568 per tonne. The cement EBIT per tonne improved sharply by
~64% YoY and ~17% QoQ to | 1230 per tonne.
The electrical division reported net sales of | 166.5 crore (decline of
37% QoQ) and EBIT margin of 7.3% (~447 bps dip QoQ). The paper
business reported an EBIT loss of | 22.9 crore in Q1FY12 as against
a loss of | 23.3 crore in Q1FY11 and | 9.4 crore in Q4FY11.
V a l u a t i o n
At the CMP of | 60, the stock is trading at 5.2x and 4.7x its FY12E and
FY13E earnings, respectively. The stock is trading at an EV/EBITDA of 3.2x
its FY12E and FY13E EBITDA, respectively. On an EV/tonne basis, the
cement business is trading at $35 and $41 its FY12E and FY13E
capacities, respectively. We have valued the cement business at
$50/tonne (60% discount to the current replacement cost of $125/tonne)
at its FY13E capacity of 5 MTPA. We are maintaining our target price of |
68 per share with a BUY recommendation.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
L o w e r c e m e n t v o l u m e s d r a g e a r n i n g s …
Orient Paper & Industries (OPIL) reported net sales of | 534 crore and net
profit of | 59 crore, in line with our respective estimates of | 547 crore and |
64 crore, respectively. During the quarter, cement sales increased ~11%
YoY (declined ~5% QoQ) to | 317 crore (our estimate: | 309 crore) aided by
29% YoY (5% QoQ) increase in realisation to | 3568 per tonne against our
expectation of | 3435 per tonne. Cement EBIT improved significantly by
~64% YoY (17% QoQ) to | 1230 per tonne. The paper business reported a
loss of | 22.9 crore at the EBIT level due to cost incurred for the plant
shutdown. Also, the company announced the demerger of its cement
business into Orient Cement (OCL), which will be listed on the exchanges
by April, 2012. OCL will have mirror shareholding as in OPIL.
ƒ Cement volume declines 14% YoY, realisation up 29% YoY
Cement sales volumes declined ~14% YoY (~10% QoQ) to 0.89 MT
on account of sluggish demand due to a slowdown in construction
activities. Cement realisations increased ~29% YoY and ~5% QoQ to
| 3568 per tonne. The cement EBIT per tonne improved sharply by
~64% YoY and ~17% QoQ to | 1230 per tonne.
The electrical division reported net sales of | 166.5 crore (decline of
37% QoQ) and EBIT margin of 7.3% (~447 bps dip QoQ). The paper
business reported an EBIT loss of | 22.9 crore in Q1FY12 as against
a loss of | 23.3 crore in Q1FY11 and | 9.4 crore in Q4FY11.
V a l u a t i o n
At the CMP of | 60, the stock is trading at 5.2x and 4.7x its FY12E and
FY13E earnings, respectively. The stock is trading at an EV/EBITDA of 3.2x
its FY12E and FY13E EBITDA, respectively. On an EV/tonne basis, the
cement business is trading at $35 and $41 its FY12E and FY13E
capacities, respectively. We have valued the cement business at
$50/tonne (60% discount to the current replacement cost of $125/tonne)
at its FY13E capacity of 5 MTPA. We are maintaining our target price of |
68 per share with a BUY recommendation.
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