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H i g h e r c o s t s h u r t m a r g i n s …
Birla Corporation reported net sales of | 538 crore (up ~12% YoY, ~4%
QoQ) and PAT of | 44 crore (down ~37% YoY, up ~67% QoQ), which
were below our respective estimates of | 626 crore and | 59 crore on
account of lower-than-expected cement volume and realisation. Cement
volumes declined ~7% YoY (flat QoQ) due to limestone mining ban in the
Chittorgarh area, which hampered the production at the Chanderia plant.
Cement EBIT/tonne declined ~29% YoY as the increase in raw material
cost, due to higher clinker purchase, negated the impact of increase in
realisations. For FY12E, we expect cement sales volumes to decline ~2%
YoY to 5.83 million tonnes per annum (MTPA) but volume is expected to
increase to 6.5 MTPA (12% YoY up) in FY13E on account of improvement
in utilisation rates and commissioning of 1.8 MTPA of grinding capacities.
ƒ Cement realisation up ~19% YoY, volume declines ~7% QoQ
Cement sales volumes declined ~7% YoY (flat QoQ) to 1.39 MTPA
as the production was hampered in its Chanderia plant after the
limestone mining ban imposed by the Jodhpur High Court. Cement
realisation increased ~19% YoY and ~8% QoQ to | 3518/tonne as
prices were increased during the quarter on anticipation of demand
pick-up after the monsoon season.
ƒ Cement EBIT/tonne down 29% YoY
Cement EBIT/tonne declined ~29% YoY to | 428/tonne on the back
of higher raw material cost that increased due to an increase in
clinker purchase after the limestone mining ban in Chanderia unit.
V a l u a t i o n
At the CMP of | 254, the stock is trading at an EV/EBITDA of 6.2x and 4.3x
FY12E and FY13E EBITDA, respectively. On an EV/tonne basis, the stock
is trading at $46 and $35 its FY12E and FY13E capacities, respectively. On
account of margin pressure due to the mining ban, we are revising down
the EV/tonne multiple to $30/tonne to value its FY13E capacity of 9.3
MTPA. We have cut our target price to | 242/share with a HOLD rating.
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 h u r t m a r g i n s …
Birla Corporation reported net sales of | 538 crore (up ~12% YoY, ~4%
QoQ) and PAT of | 44 crore (down ~37% YoY, up ~67% QoQ), which
were below our respective estimates of | 626 crore and | 59 crore on
account of lower-than-expected cement volume and realisation. Cement
volumes declined ~7% YoY (flat QoQ) due to limestone mining ban in the
Chittorgarh area, which hampered the production at the Chanderia plant.
Cement EBIT/tonne declined ~29% YoY as the increase in raw material
cost, due to higher clinker purchase, negated the impact of increase in
realisations. For FY12E, we expect cement sales volumes to decline ~2%
YoY to 5.83 million tonnes per annum (MTPA) but volume is expected to
increase to 6.5 MTPA (12% YoY up) in FY13E on account of improvement
in utilisation rates and commissioning of 1.8 MTPA of grinding capacities.
ƒ Cement realisation up ~19% YoY, volume declines ~7% QoQ
Cement sales volumes declined ~7% YoY (flat QoQ) to 1.39 MTPA
as the production was hampered in its Chanderia plant after the
limestone mining ban imposed by the Jodhpur High Court. Cement
realisation increased ~19% YoY and ~8% QoQ to | 3518/tonne as
prices were increased during the quarter on anticipation of demand
pick-up after the monsoon season.
ƒ Cement EBIT/tonne down 29% YoY
Cement EBIT/tonne declined ~29% YoY to | 428/tonne on the back
of higher raw material cost that increased due to an increase in
clinker purchase after the limestone mining ban in Chanderia unit.
V a l u a t i o n
At the CMP of | 254, the stock is trading at an EV/EBITDA of 6.2x and 4.3x
FY12E and FY13E EBITDA, respectively. On an EV/tonne basis, the stock
is trading at $46 and $35 its FY12E and FY13E capacities, respectively. On
account of margin pressure due to the mining ban, we are revising down
the EV/tonne multiple to $30/tonne to value its FY13E capacity of 9.3
MTPA. We have cut our target price to | 242/share with a HOLD rating.
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