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L owe r t a x r a t e l e a d s t o s p u r t i n b o t t oml i n e…
India Cement’s Q3FY12 net sales at | 941 crore (up 21% YoY, down
~13% QoQ) was lower than our estimate of | 1051 crore on account of
lower than expected cement volume, which came at 2.19 MT (up ~7%
YoY) against our estimate of 2.39 MT. The EBITDA margin of 20.7% and
PAT of | 56.3 crore were above our respective estimates of 18.3% and |
42.1 crore on account of lower than expected raw material cost & other
cost, coupled with lower tax rate. Blended EBITDA/tonne increased ~45%
YoY to | 890/tonne in Q3FY12 from | 619/tonne in Q3FY11 due to ~13%
YoY rise in realisation to | 4309/tonne. Going ahead, we expect cement
volumes to remain muted during FY11-13E due to lower demand growth
in the southern region. The EBITDA/tonne is expected at | 972/tonne in
FY12E and | 1001/tonne in FY13E.
ƒ Cement volume up ~7% YoY, net realisation up ~13% YoY
Cement sales volumes increased ~7% YoY to 2.19 MT mainly due
to lower base, while the volume has declined ~10% QoQ on
account of extended monsoons. Net realisation increased ~13%
YoY to | 4309/tonne as players have maintained pricing discipline
across the southern region to offset a rise in costs. However, the net
realisation has declined ~4% on a sequential basis.
ƒ Blended EBITDA/tonne improves to | 890 (up ~45% YoY)
The EBITDA/tonne improved ~45% YoY) to | 890 on the back of an
increase in realisation, which negated the impact of a rise in the total
cost/tonne. The OPM improved 450 bps YoY to 20.7%.
V a l u a t i o n
At the CMP of | 94, the stock is trading at 9.7x and 8.9x its FY12E and
FY13E earnings, respectively. The stock is trading at an EV/EBITDA of 6.1x
and 5.4x FY12E and FY13E EBITDA, respectively. On an EV/tonne basis,
the stock is trading at $60 and $57 its FY12E and FY13E capacities,
respectively. We have valued the cement business at $65/tonne at its
FY13E capacity of 15.6 MT. We have revised our target price to
| 102/share with a HOLD rating.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
CLICK here for PDF post link
L owe r t a x r a t e l e a d s t o s p u r t i n b o t t oml i n e…
India Cement’s Q3FY12 net sales at | 941 crore (up 21% YoY, down
~13% QoQ) was lower than our estimate of | 1051 crore on account of
lower than expected cement volume, which came at 2.19 MT (up ~7%
YoY) against our estimate of 2.39 MT. The EBITDA margin of 20.7% and
PAT of | 56.3 crore were above our respective estimates of 18.3% and |
42.1 crore on account of lower than expected raw material cost & other
cost, coupled with lower tax rate. Blended EBITDA/tonne increased ~45%
YoY to | 890/tonne in Q3FY12 from | 619/tonne in Q3FY11 due to ~13%
YoY rise in realisation to | 4309/tonne. Going ahead, we expect cement
volumes to remain muted during FY11-13E due to lower demand growth
in the southern region. The EBITDA/tonne is expected at | 972/tonne in
FY12E and | 1001/tonne in FY13E.
ƒ Cement volume up ~7% YoY, net realisation up ~13% YoY
Cement sales volumes increased ~7% YoY to 2.19 MT mainly due
to lower base, while the volume has declined ~10% QoQ on
account of extended monsoons. Net realisation increased ~13%
YoY to | 4309/tonne as players have maintained pricing discipline
across the southern region to offset a rise in costs. However, the net
realisation has declined ~4% on a sequential basis.
ƒ Blended EBITDA/tonne improves to | 890 (up ~45% YoY)
The EBITDA/tonne improved ~45% YoY) to | 890 on the back of an
increase in realisation, which negated the impact of a rise in the total
cost/tonne. The OPM improved 450 bps YoY to 20.7%.
V a l u a t i o n
At the CMP of | 94, the stock is trading at 9.7x and 8.9x its FY12E and
FY13E earnings, respectively. The stock is trading at an EV/EBITDA of 6.1x
and 5.4x FY12E and FY13E EBITDA, respectively. On an EV/tonne basis,
the stock is trading at $60 and $57 its FY12E and FY13E capacities,
respectively. We have valued the cement business at $65/tonne at its
FY13E capacity of 15.6 MT. We have revised our target price to
| 102/share with a HOLD rating.
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