L o w e r r e a l i s a t i o n d e n t s m a r g i n …
JK Cement’s Q2FY12 results came in line with our expectations. The
company reported net sales of | 511 crore, EBITDA of | 60 crore and PAT
of | 3.6 crore against our respective estimates of | 502 crore, | 57 crore
and | 3 crore. Increase in sales volume and realisations of both grey and
white cement helped topline grow at ~22% YoY. The EBITDA margin
came at 11.6% (our estimate: 11.5%) increasing 1040 bps YoY as higher
realisations negated the increase in costs. The margin declined 961 bps
QoQ due to a sequential decline in realisations coupled with increase in
costs. Grey cement EBITDA increased significantly to | 250/tonne during
the quarter against a loss of | 112/tonne in Q2FY11. Going forward, we
expect grey cement volumes to remain muted and grow 2% in FY12E but
they are expected to improve in FY13E by 7% in anticipation of increase
in demand. Blended EBITDA is expected to improve to | 693/tonne in
FY12E and | 726/tonne in FY13E against | 484/tonne in FY11.
ƒ Blended cement volume up ~4% YoY, realisation up ~17% YoY
Blended cement sales volumes (grey and white) increased ~4%
YoY to 1.25 MT. However, the volume declined ~12% QoQ due to
muted demand on account of a slowdown in construction activities.
Blended cement realisation increased ~17% YoY to | 4092/tonne
but declined ~4% QoQ. The blended EBITDA increased to |
477/tonne in Q2FY12 as against | 44/tonne in Q2FY11 on account of
a rise in realisations, which negated the impact of an increase in
input costs. However, it declined ~47% QoQ due to low realisations
and higher costs.
V a l u a t i o n
At the CMP of | 99, the stock is trading at 6.3x and 5.4x its FY12E and
FY13E earnings, respectively. The stock is trading at an EV/EBITDA of 4.5x
and 3.7x FY12E and FY13E EBITDA, respectively. On an EV/tonne basis,
the stock is trading at $49 its FY13E capacity of 7.5 MT. We have valued
the blended cement capacity at $50/tonne its FY13E capacity, which is
~60% discount to the current replacement cost of $130/tonne. We have
maintained our target price of | 123/share with a BUY rating
JK Cement’s Q2FY12 results came in line with our expectations. The
company reported net sales of | 511 crore, EBITDA of | 60 crore and PAT
of | 3.6 crore against our respective estimates of | 502 crore, | 57 crore
and | 3 crore. Increase in sales volume and realisations of both grey and
white cement helped topline grow at ~22% YoY. The EBITDA margin
came at 11.6% (our estimate: 11.5%) increasing 1040 bps YoY as higher
realisations negated the increase in costs. The margin declined 961 bps
QoQ due to a sequential decline in realisations coupled with increase in
costs. Grey cement EBITDA increased significantly to | 250/tonne during
the quarter against a loss of | 112/tonne in Q2FY11. Going forward, we
expect grey cement volumes to remain muted and grow 2% in FY12E but
they are expected to improve in FY13E by 7% in anticipation of increase
in demand. Blended EBITDA is expected to improve to | 693/tonne in
FY12E and | 726/tonne in FY13E against | 484/tonne in FY11.
ƒ Blended cement volume up ~4% YoY, realisation up ~17% YoY
Blended cement sales volumes (grey and white) increased ~4%
YoY to 1.25 MT. However, the volume declined ~12% QoQ due to
muted demand on account of a slowdown in construction activities.
Blended cement realisation increased ~17% YoY to | 4092/tonne
but declined ~4% QoQ. The blended EBITDA increased to |
477/tonne in Q2FY12 as against | 44/tonne in Q2FY11 on account of
a rise in realisations, which negated the impact of an increase in
input costs. However, it declined ~47% QoQ due to low realisations
and higher costs.
V a l u a t i o n
At the CMP of | 99, the stock is trading at 6.3x and 5.4x its FY12E and
FY13E earnings, respectively. The stock is trading at an EV/EBITDA of 4.5x
and 3.7x FY12E and FY13E EBITDA, respectively. On an EV/tonne basis,
the stock is trading at $49 its FY13E capacity of 7.5 MT. We have valued
the blended cement capacity at $50/tonne its FY13E capacity, which is
~60% discount to the current replacement cost of $130/tonne. We have
maintained our target price of | 123/share with a BUY rating
No comments:
Post a Comment