Madras Cement Higher realizations boost profitability HOLD ::Emkay

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Madras Cement

Higher realizations boost profitability

HOLD

CMP: Rs116                                        Target Price: Rs125

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n     Q2FY12 EBITDA at Rs2.6bn (+149% yoy) above est led by higher Cement realizations (Rs4347/t , +55% yoy) as southern cement prices held fort. APAT grows 5X on low base

n     Ariyalur unit II expected to commission by H2FY12- do not see any meaningful contribution from the unit as Ariyalur I already sub optimally utilized (~70%) owing to weak demand  

n     Cement price remain firm in south .Post recent momentum seen in prices from Sept-2011, H2FY12 prices expected to be higher leading to EPS upgrade for FY12 by 12.7% 

n     Revise TP to Rs125 by rolling over to FY13 est but downgrade reco to HOLD as the recent run up in stock already factors in the cement price hikes trigger leaving limited upside