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H i g h e r c o s t s d e n t b o t t oml i n e…
Shree Cement’s Q1FY12 net sales and EBITDA of | 1034 crore and | 259
crore, respectively, were in line with our respective estimates of | 1019
crore and | 265 crore. However, net profit of | 55 crore was ahead of our
estimate of | 5 crore on account of lower than expected depreciation.
Cement sales increased ~13% YoY (decline ~4% QoQ) to | 916.9 crore
while power sales declined ~10% YoY and ~2% QoQ to | 117.1 crore.
Cement realisation gained ~2% YoY (~3% QoQ) to | 3405/tonne. EBITDA
declined ~14% YoY to | 880/tonne on account of higher costs. Going
forward, we expect cement sales volume to grow ~4% in FY12E to 10.6
MT and ~8% YoY in FY13E to 11.5 MT. Cement EBITDA is expected at |
878/tonne in FY12E and | 943/tonne in FY13E.
ƒ Cement volume up ~11% YoY, realisation up ~2% YoY (~3% QoQ)
Cement sales volumes increased ~11% YoY to 2.69 MT. However,
they declined ~4% QoQ due to muted demand on account of a
slowdown in construction activities. Cement realisations increased
~2% YoY (~3% QoQ) to | 3405/tonne led by price increases across
its markets during March-April 2011.
ƒ Cement EBITDA declines ~14% YoY to | 880/tonne
Cement EBITDA/tonne declined ~14% YoY to | 880 on account of
~9% YoY increase in total cost/tonne. However, it has increased
~4% as the realisation rose ~3%, which negated the ~3% rise in
total cost/tonne. Power sales volumes increased ~12% YoY.
However, power realisation dropped ~20% YoY to | 4.9/unit.
V a l u a t i o n
At the CMP of | 1765, the stock is trading at 26.6x and 13.6x its FY12E and
FY13E earnings, respectively. The stock is trading at EV/EBITDA of 6.2x
and 5.1x FY12E and FY13E EBITDA, respectively. On EV/tonne basis,
cement business is trading at $76 and $73 its FY12E and FY13E
capacities, respectively. We value the cement business at $75/tonne at its
FY13E capacity of 13.5 MT and power business at 1.5x P/BV. We maintain
our BUY rating on the stock with a target price of | 2068.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
H i g h e r c o s t s d e n t b o t t oml i n e…
Shree Cement’s Q1FY12 net sales and EBITDA of | 1034 crore and | 259
crore, respectively, were in line with our respective estimates of | 1019
crore and | 265 crore. However, net profit of | 55 crore was ahead of our
estimate of | 5 crore on account of lower than expected depreciation.
Cement sales increased ~13% YoY (decline ~4% QoQ) to | 916.9 crore
while power sales declined ~10% YoY and ~2% QoQ to | 117.1 crore.
Cement realisation gained ~2% YoY (~3% QoQ) to | 3405/tonne. EBITDA
declined ~14% YoY to | 880/tonne on account of higher costs. Going
forward, we expect cement sales volume to grow ~4% in FY12E to 10.6
MT and ~8% YoY in FY13E to 11.5 MT. Cement EBITDA is expected at |
878/tonne in FY12E and | 943/tonne in FY13E.
ƒ Cement volume up ~11% YoY, realisation up ~2% YoY (~3% QoQ)
Cement sales volumes increased ~11% YoY to 2.69 MT. However,
they declined ~4% QoQ due to muted demand on account of a
slowdown in construction activities. Cement realisations increased
~2% YoY (~3% QoQ) to | 3405/tonne led by price increases across
its markets during March-April 2011.
ƒ Cement EBITDA declines ~14% YoY to | 880/tonne
Cement EBITDA/tonne declined ~14% YoY to | 880 on account of
~9% YoY increase in total cost/tonne. However, it has increased
~4% as the realisation rose ~3%, which negated the ~3% rise in
total cost/tonne. Power sales volumes increased ~12% YoY.
However, power realisation dropped ~20% YoY to | 4.9/unit.
V a l u a t i o n
At the CMP of | 1765, the stock is trading at 26.6x and 13.6x its FY12E and
FY13E earnings, respectively. The stock is trading at EV/EBITDA of 6.2x
and 5.1x FY12E and FY13E EBITDA, respectively. On EV/tonne basis,
cement business is trading at $76 and $73 its FY12E and FY13E
capacities, respectively. We value the cement business at $75/tonne at its
FY13E capacity of 13.5 MT and power business at 1.5x P/BV. We maintain
our BUY rating on the stock with a target price of | 2068.
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