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India Cement (Q3 FY13)

We expect India cements to witness 2% improvement in realisation on back of improvement in sales mix as Rajasthan plant reaches peak utilization level.

January 01, 1970 5:30 IST | India Infoline News Service
CMP Rs80, Target Rs96, Upside 20%
  • India Cements Q3 topline grew by ~15% yoy at 10.8bn, in-line with our estimate of 11.0bn; Volume jumped by 10%yoy and average realisation improved by ~4%yoy.  
  • OPM contracts by 295bps yoy; in-line with our estimate. Higher power and freight costs led to an OPM of 17.9% (our estimate was 18%)
  • PAT stood at Rs261mn (against expectation of Rs437mn), down 53.6% yoy and 46.8% qoq; higher borrowing on account of new plants and foreign exchange loss translated into 9.7% jump in interest expenses. Depreciation was higher on back of commencement of new plant.
  • We expect pricing power in Southern region (Andhra Pradesh in particular) to remain weak in coming two quarters. We expect India cements to witness 2% improvement in realisation on back of improvement in sales mix as Rajasthan plant reaches peak utilization level. Maintain BUY
Result table
(Rs m) Q3 FY13 Q3 FY12 % yoy Q2 FY13 % qoq
Net sales 10,839 9,440 14.8 11,257 (3.7)
Material costs (1,292) (1,143) 13.0 (1,402) (7.8)
Personnel costs (827) (728) 13.6 (806) 2.5
Power and fuel costs (2,974) (2,668) 11.5 (3,285) (9.5)
Freight cost (2,374) (1,711) 38.7 (2,235) 6.2
Other overheads (1,430) (1,219) 17.3 (1,449) (1.3)
Operating profit 1,942 1,970 (1.4) 2,081 (6.7)
OPM (%) 17.9 20.9 (295) bps 18.5 (57) bps
Depreciation (708) (622) 13.8 (699) 1.3
Interest (822) (750) 9.7 (667) 23.3
Other income 18 22 (14.4) 2 982.4
PBT 431 620 (30.6) 717 (39.9)
Tax (169) (57) 198.6 (226) (25.0)
Effective tax rate (%) (39.3) (9.1) (3,018) bps (31.5) (782) bps
Exceptional Item - - - - -
Reported PAT 261 563 (53.6) 491 (46.8)
Adjusted PAT 261 563 (53.6) 491 (46.8)
Source: Company, India Infoline Research

Cost analysis
As a % of net sales Q3 FY13 Q3 FY12 % yoy Q2 FY13 % qoq
Material costs 11.9 12.1 (19) 12.5 (53)
Personnel Costs 7.6 7.7 (9) 7.2 46
Power and fuel costs 27.4 28.3 (83) 29.2 (174)
Freight cost 21.9 18.1 377 19.9 204
Other overheads 13.2 12.9 28 12.9 33
Total costs    82.1 79.1 295 81.5 57
Source: Company, India Infoline Research

Financial Summary
Y/e 31 Mar (Rs m) FY11 FY12 FY13E FY14E
Revenues 35,387 42,152 46,973 49,034
yoy growth (%) (5.5) 19.1 11.4 4.4
Operating profit 3,508 9,152 8,861 8,228
OPM (%) 9.9 21.7 18.9 16.8
Pre-exceptional PAT 546 2,552 2,072 2,688
Reported PAT 570 2,552 1,872 2,688
yoy growth (%) (83.5) 347.9 (26.6) 43.6





EPS (Rs) 1.8 8.3 6.7 8.7
P/E (x) 45.0 9.6 11.9 9.1
Price/Book (x) 0.6 0.6 0.6 0.5
EV/EBITDA (x) 14.7 5.8 5.9 6.1
Debt/Equity (x) 0.7 0.7 0.7 0.6
RoE (%) 1.4 6.2 4.9 6.1
RoCE (%) 3.3 9.0 8.1 7.1
Source: Company, India Infoline Research

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