Madras Cement - Q3FY12 Result Update - Emkay

Reco: HOLD
CMP: Rs 129
Target Price: Rs 138

Lower costs drive profit beat

- MCL 3QF12 EBITDA at Rs2.07bn (+40% yoy) significantly ahead of our & street est led by lower RM cost (-3% qoq) & P&F costs (-0.6% qoq). Lower interest & depreciation charge further drove net profit beat (Rs768 mn vs est of Rs392 mn)

- Volumes up 14.6% yoy while realizations up 13% yoy (Rs4314/t) fuelled 29% yoy growth in cement sales at Rs7.3 bn. EBIDTA/t at Rs1175/t grew by a handsome 28.7% yoy

- Upgrade FY12/13 EPS by 33%/14% led by better realizations & lower depreciation & interest outgo. Revise target to Rs138 (Rs125 earlier) to factor in earnings upgrade

- MCL continued is earnings surprise led by firm cement prices. We believe next surprise has to be volume led (south price at Rs290/bag seems to have peaked out) for which sustainable uptick in southern cement demand remains key. Retain HOLD.

Source : Equity Bulls

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