|
|
| India Infoline Research Team / 17:31 , Jan 24, 2012 |
|
|
|
CMP Rs1,220, Target Rs1,125, Downside 7.8%
-
UCL Q3 FY12 results beat our margin and PAT expectations but revenues were largely in line; net sales increased 23% yoy to ~Rs46bn while PAT surged ~93% yoy to Rs6.2bn (vs est. Rs3.9bn).
-
Volume growth of 8.9% was marginally lower than industry rate of 10%, amidst increasing competition for market share by mid and small-sized players. Average realization stood at Rs4,610/ton, an increase of 16.5% yoy and 8% qoq.
-
OPM expanded by 284bps higher than our expectation margin decline by 65bps on back of 1) significant improvement in realization and 2) drop in key cost components such as raw material, freight and other overheads. Surge in power and fuel (25% yoy) was attributable to the 30% rise in the price of domestic coal by Coal India and rupee devaluation limiting the benefit arising from drop in international coal prices.
-
PAT surge of 93.4% yoy was higher than our estimates on account of margin beat and lower than estimated interest cost; effective tax rate declined to 28.9% vs 31.8% year earlier.
-
We raise our EPS estimate by 3% in FY13 in the light of likely stable realizations in the southern region; Upgrade to Market Performer with a 9-mth target of Rs1,125. Result table
| (Rs m) |
Q3 FY12 |
Q3 FY11 |
% yoy |
Q2 FY12 |
% qoq |
| Net sales |
45,719 |
37,152 |
23.1 |
39,098 |
16.9 |
| Other Operating Income |
789 |
256 |
208.0 |
709 |
11.4 |
| Material costs |
(6,313) |
(5,142) |
22.8 |
(6,669) |
(5.3) |
| Personnel costs |
(2,226) |
(1,876) |
18.7 |
(2,059) |
8.1 |
| Power and fuel costs |
(11,186) |
(8,959) |
24.9 |
(9,550) |
17.1 |
| Freight cost |
(8,403) |
(7,285) |
15.3 |
(7,480) |
12.3 |
| Other overheads |
(7,942) |
(6,813) |
16.6 |
(7,525) |
5.5 |
| Operating profit |
10,439 |
7,334 |
42.3 |
6,525 |
60.0 |
| OPM (%) |
22.4 |
19.6 |
284 bps |
16.4 |
605 bps |
| Depreciation |
(2,236) |
(2,191) |
2.1 |
(2,228) |
0.4 |
| Interest |
(295) |
(818) |
(63.9) |
(672) |
(56.0) |
| Other income |
765 |
350 |
118.5 |
325 |
135.3 |
| PBT |
8,672 |
4,675 |
85.5 |
3,951 |
119.5 |
| Tax |
(2,503) |
(1,486) |
68.5 |
(1,162) |
115.4 |
| Effective tax rate (%) |
(28.9) |
(31.8) |
291 bps |
(29.4) |
55 bps |
| Reported PAT |
6,168 |
3,190 |
93.4 |
2,789 |
121.2 |
| Adj. PAT margin (%) |
13.5 |
8.6 |
491 bps |
7.1 |
636 bps |
| Ann. EPS (Rs) |
90.0 |
47 |
92% |
41 |
121% | Source: Company, India Infoline Research
Cost analysis
| As a % of net sales |
Q3 FY12 |
Q3 FY11 |
bps yoy |
Q2 FY12 |
bps qoq |
| Material costs |
13.6 |
13.7 |
(17) |
16.8 |
(318) |
| Personnel Costs |
4.8 |
5.0 |
(23) |
5.2 |
(38) |
| Power and fuel costs |
24.1 |
23.9 |
10 |
24.0 |
6 |
| Freight cost |
18.1 |
19.5 |
(141) |
18.8 |
(72) |
| Other overheads |
17.1 |
18.2 |
(114) |
18.9 |
(183) |
| Total costs |
77.6 |
80.4 |
(284) |
83.6 |
(605) | Source: Company, India Infoline Research
Financial Summary
| Y/e 31 Mar (Rs m) |
FY10E |
FY11 |
FY12E |
FY13E |
| Revenues |
72,390 |
155,647 |
178,880 |
195,987 |
| yoy growth (%) |
9.4 |
115.0 |
14.9 |
9.6 |
| Operating profit |
20,486 |
32,911 |
41,162 |
44,693 |
| OPM (%) |
28.3 |
21.1 |
23.0 |
22.8 |
| Pre-exceptional PAT |
10,952 |
17,192 |
22,312 |
24,133 |
| Reported PAT |
10,952 |
17,192 |
22,312 |
24,133 |
| yoy growth (%) |
12.0 |
57.0 |
29.8 |
8.2 |
| |
|
|
|
|
| EPS (Rs) |
86.6 |
61.7 |
80.0 |
86.6 |
| P/E (x) |
14.0 |
19.7 |
15.2 |
14.0 |
| Price/Book (x) |
3.3 |
3.2 |
2.6 |
2.2 |
| EV/EBITDA (x) |
8.2 |
11.9 |
9.4 |
8.4 |
| Debt/Equity (x) |
0.3 |
0.5 |
0.5 |
0.4 |
| RoE (%) |
26.6 |
22.5 |
19.0 |
17.3 |
| RoCE (%) |
25.3 |
20.7 |
17.9 |
17.6 | Source: Company, India Infoline Research
|
|
|
|
|
|
|
|