India Cements (Q1 FY14)

India Infoline News Service | Mumbai |

We expect pricing discipline to emerge in Southern region as demand improves in the run up to general elections.

CMP Rs46, Target Rs60, Upside 30%
  • India Cements (ICL) Q1 topline grew by ~3% yoy, above our estimate of Rs11bn; volumes jumped ~11% yoy while average realization was down due to early monsoon this year.


  • OPM contracts 770bps yoy, in-line with our estimate; higher freight, fuel and other overhead costs drag margins.


  • PAT stood at Rs168mn (against expectation of Rs70mn), down 80% yoy impacted by Rs270mn of foreign exchange loss


  • We expect pricing discipline to emerge in Southern region as demand improves in the run up to general elections. We expect volume growth to remain muted for ICL for current fiscal but realization to improve on back of better sales mix.


  • We reduce our 9-12 month target price to Rs60 as we cut FY15 estimates and EV/ton valuation on the back of concerns around cement business post general election. We value cement business at US$50 EV/ton, at a significant discount to large players on back of poor operating dynamics in its key Southern markets

Result table
(Rs m)
Q1 FY14
Q1 FY13
% yoy
Q4 FY13
% qoq
Net sales
12,407
12,050
3.0
11,990
3.5
Material costs
(1,444)
(1,363)
5.9
(1,529)
(5.6)
Personnel costs
(840)
(787)
6.7
(919)
(8.7)
Power and fuel costs
(3,301)
(2,880)
14.6
(3,412)
(3.2)
Freight cost
(2,650)
(2,229)
18.9
(2,747)
(3.5)
Other overheads
(2,238)
(1,977)
13.2
(1,620)
38.1
Operating profit
1,934
2,814
(31.3)
1,763
9.7
OPM (%)
15.6
23.4
(776 bps)
14.7
89 bps
Depreciation
(680)
(692)
(1.7)
(720)
(5.7)
Interest
(999)
(949)
5.2
(639)
56.4
Other income
2
0
275.0
-
-
PBT
257
1,173
(78.1)
404
(36.3)
Tax
(89)
(352)
(74.7)
(141)
(36.6)
Effective tax rate (%)
(34.6)
(30.0)
(461 bps)
(34.8)
17 bps
Exceptional Item
-
200
-
-
-
Reported PAT
168
821
(79.5)
263
(36.1)
Adjusted PAT
BSE 172.50 [1.80] ([1.03]%)
NSE 172.70 [1.70] ([0.97]%)

***Note: This is a NSE Chart

 

Advertisements

  • Save upto Rs.2.67 lakh with Pradhan Mantri Awas Yojana ...Know more
  • Now Save Rs.3150 on your Demat Account ...Click here
  • Now get IIFL Personal Loan in just 8* hours...APPLY NOW!
  • Get the most detailed result analysis on the web - Real Fast!
  • Actionable & Award-Winning Research on 500 Listed Indian Companies.