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P r o f i t a b i l i t y j ump s o n h i g h e r c eme n t ma r g i n…
Orient Paper & Industries (OPIL) reported net sales of | 576 crore (up
~31% YoY, ~14% QoQ), which was in line with our estimate of | 584
crore. The EBITDA margin of 15.5% and net profit of | 42 crore were
above our respective estimates of 11.9% and | 38.3 crore. Cement
revenues increased ~51% YoY to | 345 crore aided by ~21% YoY
increase in realisation and ~25% increase in volume. Cement EBIT
improved ~44% YoY to | 874/tonne. In the paper business, despite
~23% QoQ increase in sales, the company reported EBIT loss of | 15.3
crore due to higher input costs. The EBIT margin of the electrical segment
has declined sharply ~531 bps YoY to 3.2% on account of a rise in costs.
ƒ Net realisation increases ~21% YoY, cement volume up ~25% YoY
Cement sales volumes increased ~25% YoY and ~16% QoQ to 0.96
MT. Cement volumes picked up during the quarter on account of
increasing offtake from construction activities post monsoon. Cement
realisations increased ~21% YoY (flat QoQ) to | 3594/tonne. The
cement EBIT/tonne increased ~44% YoY to | 874/tonne on higher
realisation while it increased ~28% QoQ on lower fuel cost.
The electrical division reported net sales of | 136.5 crore (increase of
13% YoY) on higher volumes. The EBIT margin has declined ~531
bps YoY to 3.2% due to higher costs. The paper business reported
an EBIT loss of | 15.3 crore in Q3FY12 as against a loss of | 14.9
crore in Q2FY12 and profit of | 2.7 crore in Q3FY11.
V a l u a t i o n
At the CMP of | 51, the stock is trading at 5.6x and 5.2x its FY12E and
FY13E earnings, respectively. The stock is trading at an EV/EBITDA of 4.1x
and 3.5x FY12E and FY13E EBITDA, respectively. On an EV/tonne basis,
the stock is trading at $41 and $35 its FY12E and FY13E capacities,
respectively. We have valued the cement business at $50/tonne at its
FY13E capacity of 5 MT, which is ~60% discount to the current
replacement cost of $135/tonne. We have maintained our BUY rating on
the stock with a target price of | 71/share
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
P r o f i t a b i l i t y j ump s o n h i g h e r c eme n t ma r g i n…
Orient Paper & Industries (OPIL) reported net sales of | 576 crore (up
~31% YoY, ~14% QoQ), which was in line with our estimate of | 584
crore. The EBITDA margin of 15.5% and net profit of | 42 crore were
above our respective estimates of 11.9% and | 38.3 crore. Cement
revenues increased ~51% YoY to | 345 crore aided by ~21% YoY
increase in realisation and ~25% increase in volume. Cement EBIT
improved ~44% YoY to | 874/tonne. In the paper business, despite
~23% QoQ increase in sales, the company reported EBIT loss of | 15.3
crore due to higher input costs. The EBIT margin of the electrical segment
has declined sharply ~531 bps YoY to 3.2% on account of a rise in costs.
ƒ Net realisation increases ~21% YoY, cement volume up ~25% YoY
Cement sales volumes increased ~25% YoY and ~16% QoQ to 0.96
MT. Cement volumes picked up during the quarter on account of
increasing offtake from construction activities post monsoon. Cement
realisations increased ~21% YoY (flat QoQ) to | 3594/tonne. The
cement EBIT/tonne increased ~44% YoY to | 874/tonne on higher
realisation while it increased ~28% QoQ on lower fuel cost.
The electrical division reported net sales of | 136.5 crore (increase of
13% YoY) on higher volumes. The EBIT margin has declined ~531
bps YoY to 3.2% due to higher costs. The paper business reported
an EBIT loss of | 15.3 crore in Q3FY12 as against a loss of | 14.9
crore in Q2FY12 and profit of | 2.7 crore in Q3FY11.
V a l u a t i o n
At the CMP of | 51, the stock is trading at 5.6x and 5.2x its FY12E and
FY13E earnings, respectively. The stock is trading at an EV/EBITDA of 4.1x
and 3.5x FY12E and FY13E EBITDA, respectively. On an EV/tonne basis,
the stock is trading at $41 and $35 its FY12E and FY13E capacities,
respectively. We have valued the cement business at $50/tonne at its
FY13E capacity of 5 MT, which is ~60% discount to the current
replacement cost of $135/tonne. We have maintained our BUY rating on
the stock with a target price of | 71/share
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