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India Cements (Q4 FY13)

India Cements (ICL) Q4 topline grew by ~7% yoy at 12bn, below our estimate of Rs12.6bn; volumes jumped ~2% yoy and average realisation improved ~4% yoy

January 01, 1970 5:30 IST | India Infoline News Service
CMP Rs87, Target Rs97, Upside 11%

  • India Cements (ICL) Q4 topline grew by ~7% yoy at 12bn, below our estimate of Rs12.6bn; volumes jumped ~2% yoy and average realisation improved ~4% yoy

  • OPM contracts 476bps yoy, in-line with our estimate; higher freight and other overhead costs drag margins.

  • PAT stood at Rs263mn (against expectation of Rs423mn), down 59% yoy; depreciation was higher on back of commencement of new plant.

  • We expect pricing discipline to emerge in Southern region to counter the weakening demand trend in the next two quarters. Thereby, we factor volume growth to remain muted for ICL in the near term. However, we expect realisation to improve on back of better sales mix as Rajasthan plant reaches peak utilization levels.

  • We retain our 9-12 mth target price of Rs97 despite slowdown concerns around cement business as valuations remain compelling. We value cement business at US$60 EV/ton, at a ~60% discount to large players like Ambuja Cement, ACC and Ultratech, on back of poor operating dynamics in its key Southern markets .

Result table
(Rs m) Q4 FY13 Q4 FY12 % yoy Q3 FY13 % qoq
Net sales 11,990 11,185 7.2 10,839 10.6
Material costs (1,529) (1,482) 3.2 (1,292) 18.3
Personnel costs (919) (921) (0.2) (827) 11.2
Power and fuel costs (3,412) (3,175) 7.4 (2,974) 14.7
Freight cost (2,747) (2,119) 29.6 (2,374) 15.7
Other overheads (1,620) (1,311) 23.6 (1,430) 13.3
Operating profit 1,763 2,176 (19.0) 1,942 (9.2)
OPM (%) 14.7 19.5 (476 bps) 17.9 (322 bps)
Depreciation (720) (646) 11.5 (708) 1.8
Interest (639) (640) (0.2) (822) (22.3)
Other income - 45 (100.0) 18 (100.0)
PBT 404 935 (56.8) 431 (6.2)
Tax (141) (286) (50.9) (169) (17.0)
Effective tax rate (%) (34.8) (30.6) -423 bps (39.3) 452 bps
Exceptional Item - - - - -
Reported PAT 263 649 (59.5) 261 0.8
Source: Company, India Infoline Research

Cost analysis
As a % of net sales Q4 FY13 Q4 FY12 bps yoy Q3 FY13 bps qoq
Material costs 12.8 13.2 (50) 11.9 83
Personnel Costs 7.7 8.2 (57) 7.6 4
Power and fuel costs 28.5 28.4 7 27.4 101
Freight cost 22.9 18.9 396 21.9 101
Other overheads 13.5 11.7 179 13.2 32
Total costs   85.3 80.5 476 82.1 322
Source: Company, India Infoline Research

Financial Summary
Y/e 31 Mar (Rs m) FY12 FY13 FY14E FY15E
Revenues 42,152 46,136 49,018 52,009
yoy growth (%) 19.1 9.5 6.2 6.1
Operating profit 9,152 8,600 8,172 8,934
OPM (%) 21.7 18.6

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