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Demand trends are improving. CUMI’s 3QFY15 results were in line with estimates, assuming foreign currency gains in Russia as part of operating profits. Restructuring of African operations is yielding results (reflected in sequential improvement in EM profitability). More gains should follow. It is seeing encouraging demand trends in India: (1) Industry volume growth in abrasives has revived to double digits, and (2) stalled projects have started moving. With the exception of Europe, demand trends are getting better elsewhere (outside India) too. We have cut estimates; retain ADD with an unchanged TP of Rs200.
�� India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details ��
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Restructuring of African operations yields results CUMI’s 3QFY15 consolidated (Rs5 bn) were down 3.3% yoy because of a large negative impact (~Rs340 mn on a qoq basis) of translation on sales of its Russian subsidiary (due to significant depreciation in Ruble in the last couple of quarters). Consolidated EBITDA was Rs572 mn (+21% yoy) with EBITDA margins at 11.4% (+230 bps yoy, +120 bps qoq). Absolute improvement (qoq) in margins was lower as the increase (~Rs130 mn) in profitability of its African operations was offset by translation losses in the Russian business (~Rs54 mn) and qoq deterioration of Rs60 mn in the PBIT of its abrasive business on weak sales trend. Ideally, foreign exchange gains (Rs107 mn) should be taken into operational numbers as (1), these gains are because of increased realizations on current assets due to sharp depreciation in currency, (2), translation losses are part of operating numbers, and (3), In the long term, pricing in Ruble terms would adjust so as to give similar realizations in US$ terms as earlier, as Sic would trade as a US$ denominated commodity. After including these as part of operations, margins look much better. Consolidated PAT was Rs221 mn. Demand trends are improving, especially in India In India, volume growth in the abrasive industry is back to double-digit levels from flattish growth in the last two years. Also, stalled infrastructure projects (power etc.) have started moving, thereby improving demand conditions for ceramics/refractories. The management said it is seeing improving demand in all its relevant geographies, Europe being the exception. Favorable demand trends should reflect in higher volumes and improving margins ahead. Cutting estimates; retain ADD with an unchanged TP of Rs200 We have cut our estimates led by: (1) lower margins in the abrasive segment, and (2) lower sales in the EM segment. Cut in FY2015 numbers has had a follow through impact on the rest of the years. We retain ADD with an unchanged target price of Rs200 at 18X December 2016 EPS.
LINK
http://www.kotaksecurities.com/pdf/indiadaily/indiadaily02022015ka.pdf
Demand trends are improving. CUMI’s 3QFY15 results were in line with estimates, assuming foreign currency gains in Russia as part of operating profits. Restructuring of African operations is yielding results (reflected in sequential improvement in EM profitability). More gains should follow. It is seeing encouraging demand trends in India: (1) Industry volume growth in abrasives has revived to double digits, and (2) stalled projects have started moving. With the exception of Europe, demand trends are getting better elsewhere (outside India) too. We have cut estimates; retain ADD with an unchanged TP of Rs200.
�� India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details ��
��
Restructuring of African operations yields results CUMI’s 3QFY15 consolidated (Rs5 bn) were down 3.3% yoy because of a large negative impact (~Rs340 mn on a qoq basis) of translation on sales of its Russian subsidiary (due to significant depreciation in Ruble in the last couple of quarters). Consolidated EBITDA was Rs572 mn (+21% yoy) with EBITDA margins at 11.4% (+230 bps yoy, +120 bps qoq). Absolute improvement (qoq) in margins was lower as the increase (~Rs130 mn) in profitability of its African operations was offset by translation losses in the Russian business (~Rs54 mn) and qoq deterioration of Rs60 mn in the PBIT of its abrasive business on weak sales trend. Ideally, foreign exchange gains (Rs107 mn) should be taken into operational numbers as (1), these gains are because of increased realizations on current assets due to sharp depreciation in currency, (2), translation losses are part of operating numbers, and (3), In the long term, pricing in Ruble terms would adjust so as to give similar realizations in US$ terms as earlier, as Sic would trade as a US$ denominated commodity. After including these as part of operations, margins look much better. Consolidated PAT was Rs221 mn. Demand trends are improving, especially in India In India, volume growth in the abrasive industry is back to double-digit levels from flattish growth in the last two years. Also, stalled infrastructure projects (power etc.) have started moving, thereby improving demand conditions for ceramics/refractories. The management said it is seeing improving demand in all its relevant geographies, Europe being the exception. Favorable demand trends should reflect in higher volumes and improving margins ahead. Cutting estimates; retain ADD with an unchanged TP of Rs200 We have cut our estimates led by: (1) lower margins in the abrasive segment, and (2) lower sales in the EM segment. Cut in FY2015 numbers has had a follow through impact on the rest of the years. We retain ADD with an unchanged target price of Rs200 at 18X December 2016 EPS.
LINK
http://www.kotaksecurities.com/pdf/indiadaily/indiadaily02022015ka.pdf
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