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For CCCL the run of dismal performances continue. Though the company’s
performance on the revenue front was higher than our expectations; however, it
was shocking, to say the least, at the earnings front, due to a substantial dip in
EBITDAM and higher than anticipated interest cost. We are revising our estimates
further downwards for FY2012 and FY2013 and are also assigning lower target
PE multiple (7x from earlier 8x) to factor in the poor performance during the
quarter, persistent weakness in business environment and expected poor
performance in second half of the fiscal. Hence, we downgrade the stock to
Reduce from Neutral with a Target Price of `17.
EBITDAM take a plunge + high interest cost ��Earnings in red: For 2QFY2012,
CCCL’s top line grew by 9.5% yoy to `535.8cr (`489.5cr), against our estimate
of `465.0cr. On the EBITDAM front, the company posted abysmal margin of
1.4% (7.8%), registering a decline of 640bp yoy against our expectation of
261bp. On a sequential basis as well, CCCL’s margin witnessed a 340bp
decline. The decline in margin can be attributed to commodity price pressures
and increased employee and labor costs. Therefore, on the bottom-line front, the
company reported loss of `18.7cr in 2QFY2012 vs. profit of `13.7cr in
2QFY2011, against our expectation of `1.4cr profit, mainly on account of lower
margin and higher interest cost (`17.2cr, a jump of 42.1%/11.3% yoy/qoq).
Outlook and valuation: CCCL has been posting erratic numbers on the EBITDAM
front and consequently has been performing poorly on the earnings front as well
since the last few quarters. We have revised our numbers and PE multiple
downwards owing to the reasons mentioned above. Our revised target price for
CCCL is `17/share based on 7.0x on its FY2013E EPS of `2.4; implying a
downside of ~11% from current levels hence, we downgrade the stock’s rating to
Reduce from Neutral.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
For CCCL the run of dismal performances continue. Though the company’s
performance on the revenue front was higher than our expectations; however, it
was shocking, to say the least, at the earnings front, due to a substantial dip in
EBITDAM and higher than anticipated interest cost. We are revising our estimates
further downwards for FY2012 and FY2013 and are also assigning lower target
PE multiple (7x from earlier 8x) to factor in the poor performance during the
quarter, persistent weakness in business environment and expected poor
performance in second half of the fiscal. Hence, we downgrade the stock to
Reduce from Neutral with a Target Price of `17.
EBITDAM take a plunge + high interest cost ��Earnings in red: For 2QFY2012,
CCCL’s top line grew by 9.5% yoy to `535.8cr (`489.5cr), against our estimate
of `465.0cr. On the EBITDAM front, the company posted abysmal margin of
1.4% (7.8%), registering a decline of 640bp yoy against our expectation of
261bp. On a sequential basis as well, CCCL’s margin witnessed a 340bp
decline. The decline in margin can be attributed to commodity price pressures
and increased employee and labor costs. Therefore, on the bottom-line front, the
company reported loss of `18.7cr in 2QFY2012 vs. profit of `13.7cr in
2QFY2011, against our expectation of `1.4cr profit, mainly on account of lower
margin and higher interest cost (`17.2cr, a jump of 42.1%/11.3% yoy/qoq).
Outlook and valuation: CCCL has been posting erratic numbers on the EBITDAM
front and consequently has been performing poorly on the earnings front as well
since the last few quarters. We have revised our numbers and PE multiple
downwards owing to the reasons mentioned above. Our revised target price for
CCCL is `17/share based on 7.0x on its FY2013E EPS of `2.4; implying a
downside of ~11% from current levels hence, we downgrade the stock’s rating to
Reduce from Neutral.
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