Net sales up 1.7% YoY: Volumes grew 0.5% YoY (13% QoQ) to 2.2MT (v/s our
estimate of 2.36MT). Realization grew 8.4% YoY but was flat QoQ at INR4,465/
ton (v/s our estimate of INR4,646/ton), despite a seasonally strong quarter.
Net sales grew 1.7% YoY (declined 6% QoQ) to INR9.3b.
EBITDA down 29% YoY: EBITDA declined 29% YoY (30% QoQ) to INR1.4b (v/s
our estimate of INR2.6b). EBITDA margin contracted ~7pp YoY (8pp QoQ) to
15.2%. Cement EBITDA/ton declined by INR176 YoY (INR264 QoQ) to INR740.
The sequential decline in profitability was driven by flattish realization, and
higher freight cost (+INR90/ton) and other expenditure (+INR109/ton). Energy
cost moderated sequentially due to softening of imported coal prices. Other
expenditure was up by INR220m due to increase in ad spends necessitated
by entry into the eastern market (on dealer network, brand building, etc).
PAT down 35% YoY: PAT declined 35% YoY (24% QoQ) to INR642m, led by
lower depreciation, interest and effective tax rate.
Cutting estimates; maintain Buy: We are downgrading our EPS estimates for
FY14/15 by 9%/2% to factor in (1) change in realization estimates to INR6.5/
bag for FY14 (INR13.5/bag earlier) and to INR15/bag for FY15 (INR12.5/bag
earlier), (2) higher escalation in freight cost and other expenditure for entry
into eastern market, and (3) lower interest and depreciation in FY14/15. The
stock trades at 7.9x FY15E EPS, and at an EV of 4.6x FY15E EBITDA and USD82/
ton. We maintain Buy, with a target price of INR300 (35% upside). The board
has approved a dividend of INR3/share (v/s INR2.5/share in FY12).
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estimate of 2.36MT). Realization grew 8.4% YoY but was flat QoQ at INR4,465/
ton (v/s our estimate of INR4,646/ton), despite a seasonally strong quarter.
Net sales grew 1.7% YoY (declined 6% QoQ) to INR9.3b.
EBITDA down 29% YoY: EBITDA declined 29% YoY (30% QoQ) to INR1.4b (v/s
our estimate of INR2.6b). EBITDA margin contracted ~7pp YoY (8pp QoQ) to
15.2%. Cement EBITDA/ton declined by INR176 YoY (INR264 QoQ) to INR740.
The sequential decline in profitability was driven by flattish realization, and
higher freight cost (+INR90/ton) and other expenditure (+INR109/ton). Energy
cost moderated sequentially due to softening of imported coal prices. Other
expenditure was up by INR220m due to increase in ad spends necessitated
by entry into the eastern market (on dealer network, brand building, etc).
PAT down 35% YoY: PAT declined 35% YoY (24% QoQ) to INR642m, led by
lower depreciation, interest and effective tax rate.
Cutting estimates; maintain Buy: We are downgrading our EPS estimates for
FY14/15 by 9%/2% to factor in (1) change in realization estimates to INR6.5/
bag for FY14 (INR13.5/bag earlier) and to INR15/bag for FY15 (INR12.5/bag
earlier), (2) higher escalation in freight cost and other expenditure for entry
into eastern market, and (3) lower interest and depreciation in FY14/15. The
stock trades at 7.9x FY15E EPS, and at an EV of 4.6x FY15E EBITDA and USD82/
ton. We maintain Buy, with a target price of INR300 (35% upside). The board
has approved a dividend of INR3/share (v/s INR2.5/share in FY12).
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