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Q3FY12 – Strong Y-o-Y performance, driven by increase in realisation
• Net sales of India Cements Ltd (ICL) for Q3FY12 grew by 20.5% Y-o-Y driven by sharp increase
in realisation and volume for cement.
• EBIDTA margin for Q3FY12 improved by 443bps on a Y-o-Y basis mainly on account of increase
in realisation. However on a Q-o-Q basis EBIDTA margin declined by 244bps.
• Net profit rose by 162% Y-o-Y, this was primarily on account of increase in realisation and partly
due to carry forward of foreign exchange translation loss amounting to `127.9 mn to “Foreign
Exchange Monetary Translation Difference Account” instead of considering it in P&L.
• Considering the same in to P&L, PAT would have shown a growth of 102% Y-o-Y.
Result Highlights
Strong demand in ICL’s key markets helped ICL post strong results for Q3FY12.
Consumption in ICL’s key markets (Southern India) rose by 3.3% as against a negative growth of
4.12% for first six months. Cement consumption for Q3FY12 in Tamil Nadu grew by 18% Y-o-Y,
followed by Andhra Pradesh which grew by 12% Y-o-Y. Similarly, Kerala showed a growth of 15% Yo-
Y and Karnataka saw an 8% Y-o-Y growth.
As a result of the strong demand in the region, ICL’s sales volume grew by 7% Y-o-Y to 2.18 mn MT.
The net plant realisation in Q3FY12 rose by 20% Y-o-Y to `3460/MT. EBIDTA per MT rose to RS
910/MT from `650/MT, showing an increase of 40% Y-o-Y.
On account of the increased use of Imported coal in to raw material mix the average blended cost
of coal rose to `6,600/MT in Q3FY12 from `6,310/MT in Q2FY12.
Valuation & Viewpoint
Over last two years EV per MT in US$ has been in the range of US$63-99. At current market price
the stock is trading at US$77.8/MT, a 27% discount compared to its last two years high and at 196%
discount to its all time high. Given a) the strong pricing trends on account of pricing discipline, b)
steady demand over next 4-5 months, and c) stabilization of the CPP, we expect ICL to witness an
improvement in margin going forward.
Concall Highlights
• ICL has commissioned its 50MW Captive Power Plant (CPP) during last month and expects to
reach normalcy by Mar’12 and full benefit would accrue from Q1Y13E. Company expects to
save `.1/unit.
• ICL has installed its 25MW CPP at its Mahi plant in Rajasthan, through its 61% subsidiary
Trinetra Cement. Owing to high cost of power in Rajasthan the savings from CPP would be
`2/unit. The complete benefit would accrue from Q1FY13.
• The proposal by both the Tamil Nadu and Andhra Pradesh State electricity board to raise
power tariff by `0.5/unit and `1/ unit might increase the cost. However given the strong
pricing trends, the same would be passed on to consumers.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Q3FY12 – Strong Y-o-Y performance, driven by increase in realisation
• Net sales of India Cements Ltd (ICL) for Q3FY12 grew by 20.5% Y-o-Y driven by sharp increase
in realisation and volume for cement.
• EBIDTA margin for Q3FY12 improved by 443bps on a Y-o-Y basis mainly on account of increase
in realisation. However on a Q-o-Q basis EBIDTA margin declined by 244bps.
• Net profit rose by 162% Y-o-Y, this was primarily on account of increase in realisation and partly
due to carry forward of foreign exchange translation loss amounting to `127.9 mn to “Foreign
Exchange Monetary Translation Difference Account” instead of considering it in P&L.
• Considering the same in to P&L, PAT would have shown a growth of 102% Y-o-Y.
Result Highlights
Strong demand in ICL’s key markets helped ICL post strong results for Q3FY12.
Consumption in ICL’s key markets (Southern India) rose by 3.3% as against a negative growth of
4.12% for first six months. Cement consumption for Q3FY12 in Tamil Nadu grew by 18% Y-o-Y,
followed by Andhra Pradesh which grew by 12% Y-o-Y. Similarly, Kerala showed a growth of 15% Yo-
Y and Karnataka saw an 8% Y-o-Y growth.
As a result of the strong demand in the region, ICL’s sales volume grew by 7% Y-o-Y to 2.18 mn MT.
The net plant realisation in Q3FY12 rose by 20% Y-o-Y to `3460/MT. EBIDTA per MT rose to RS
910/MT from `650/MT, showing an increase of 40% Y-o-Y.
On account of the increased use of Imported coal in to raw material mix the average blended cost
of coal rose to `6,600/MT in Q3FY12 from `6,310/MT in Q2FY12.
Valuation & Viewpoint
Over last two years EV per MT in US$ has been in the range of US$63-99. At current market price
the stock is trading at US$77.8/MT, a 27% discount compared to its last two years high and at 196%
discount to its all time high. Given a) the strong pricing trends on account of pricing discipline, b)
steady demand over next 4-5 months, and c) stabilization of the CPP, we expect ICL to witness an
improvement in margin going forward.
Concall Highlights
• ICL has commissioned its 50MW Captive Power Plant (CPP) during last month and expects to
reach normalcy by Mar’12 and full benefit would accrue from Q1Y13E. Company expects to
save `.1/unit.
• ICL has installed its 25MW CPP at its Mahi plant in Rajasthan, through its 61% subsidiary
Trinetra Cement. Owing to high cost of power in Rajasthan the savings from CPP would be
`2/unit. The complete benefit would accrue from Q1FY13.
• The proposal by both the Tamil Nadu and Andhra Pradesh State electricity board to raise
power tariff by `0.5/unit and `1/ unit might increase the cost. However given the strong
pricing trends, the same would be passed on to consumers.
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