Madras Cements - One of the best bets in the cement sector - Nirmal Bang

Madras Cements posted net sales of Rs.3236.1 crore compared to Rs.2604.9 crore, an increase of 24.2 per cent y-o-y. The company registered EBITDA growth of 47.5 per cent y-o-y at Rs.969.7 crore. Profit after tax for the year stood at Rs.385.2 crore. EPS for the year stood at Rs.16.2.

During Q1FY'13, the company registered revenues of Rs.989.3 crore, an increase of 29.5 per cent y-o-y. EBITDA registered robust growth of 25.7 per cent y-o-y at Rs.314.4 crore compared to Rs.250.1 crore last year. PAT for the year stood at Rs.123 crore compared to Rs.98.3 crore last year, translating into an EPS of Rs.5.17.

Considering the operating profit margins and the Balance Sheet, Madras Cements is one of the better managed companies in south India. The stock is available at an EV/tonne of USD104 which is relatively cheaper compared to the large players in the segment.

At the present price, the company is trading at an EV/tonne of USD104. This is quite attractive considering EBITDA margins of close to 30 per cent, relatively clean Balance Sheet and improvement in earnings backed by stability in prices in south India.

We expect the share price to touch Rs.250 over the next 6 to 9 months providing an upside potential of 23 per cent.

Source : Equity Bulls

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