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H i g h r e a l i s a t i o n l e a d s t o s p u r t i n e a r n i n g s…
Shree Cement’s Q3FY12 net sales of | 1259 crore (up ~61% YoY, ~47%
QoQ) and EBITDA of | 332 crore (up ~111% YoY, ~66% QoQ) were in
line with our respective estimates of | 1225 crore and | 328 crore.
However, net profit of | 59 crore (up ~77% YoY, ~49% QoQ) was lower
than our estimate of | 74 crore on account of higher than expected
depreciation of | 235 crore (our estimate: | 177 crore). The EBITDA
margin improved 620 bps YoY (296 bps QoQ) to 26.4% on higher cement
realisations and decline in fuel cost. Cement revenues increased ~45%
YoY (~27% QoQ) to | 1081 crore on higher volumes and realisations.
Power sales increased significantly to | 177 crore on increase in power
volumes to 256 million units. Going forward, we expect cement sales
volume to grow ~7% in FY12E to 11 MT and ~6% YoY in FY13E to 11.6
MT. Cement EBITDA is expected at | 962/tonne in FY12E and
| 1029/tonne in FY13E.
ƒ Cement volume up ~12% YoY (~17% QoQ)
Cement sales volumes increased ~12% YoY and ~17% QoQ to 2.92
MT due to a pick-up in demand post monsoons. Cement realisations
increased ~30% YoY (~8% QoQ) to | 3703/tonne on account of
price hikes during the quarter.
ƒ Cement EBITDA increases to | 1084/tonne
The EBITDA/tonne increased ~96% YoY (~35% QoQ) to |
1084/tonne on account of higher realisation, which negated the
impact of an increase in input costs.
V a l u a t i o n
At the CMP of | 2231, the stock is trading at 35.6x and 17.3x its FY12E and
FY13E earnings, respectively. The stock is trading at an EV/EBITDA of 7.2x
and 5.7x FY12E and FY13E EBITDA, respectively. On an EV/tonne basis,
the stock is trading at $91/tonne and $83/tonne its FY12E and FY13E
capacities, respectively. We have valued the cement business at
$100/tonne its FY13E capacity of 13.5 MT (~35% discount to the current
replacement cost of $135/tonne) and maintained our BUY rating on the
stock with a revised target price of | 2497/share.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
H i g h r e a l i s a t i o n l e a d s t o s p u r t i n e a r n i n g s…
Shree Cement’s Q3FY12 net sales of | 1259 crore (up ~61% YoY, ~47%
QoQ) and EBITDA of | 332 crore (up ~111% YoY, ~66% QoQ) were in
line with our respective estimates of | 1225 crore and | 328 crore.
However, net profit of | 59 crore (up ~77% YoY, ~49% QoQ) was lower
than our estimate of | 74 crore on account of higher than expected
depreciation of | 235 crore (our estimate: | 177 crore). The EBITDA
margin improved 620 bps YoY (296 bps QoQ) to 26.4% on higher cement
realisations and decline in fuel cost. Cement revenues increased ~45%
YoY (~27% QoQ) to | 1081 crore on higher volumes and realisations.
Power sales increased significantly to | 177 crore on increase in power
volumes to 256 million units. Going forward, we expect cement sales
volume to grow ~7% in FY12E to 11 MT and ~6% YoY in FY13E to 11.6
MT. Cement EBITDA is expected at | 962/tonne in FY12E and
| 1029/tonne in FY13E.
ƒ Cement volume up ~12% YoY (~17% QoQ)
Cement sales volumes increased ~12% YoY and ~17% QoQ to 2.92
MT due to a pick-up in demand post monsoons. Cement realisations
increased ~30% YoY (~8% QoQ) to | 3703/tonne on account of
price hikes during the quarter.
ƒ Cement EBITDA increases to | 1084/tonne
The EBITDA/tonne increased ~96% YoY (~35% QoQ) to |
1084/tonne on account of higher realisation, which negated the
impact of an increase in input costs.
V a l u a t i o n
At the CMP of | 2231, the stock is trading at 35.6x and 17.3x its FY12E and
FY13E earnings, respectively. The stock is trading at an EV/EBITDA of 7.2x
and 5.7x FY12E and FY13E EBITDA, respectively. On an EV/tonne basis,
the stock is trading at $91/tonne and $83/tonne its FY12E and FY13E
capacities, respectively. We have valued the cement business at
$100/tonne its FY13E capacity of 13.5 MT (~35% discount to the current
replacement cost of $135/tonne) and maintained our BUY rating on the
stock with a revised target price of | 2497/share.
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