Madras Cements - 4QFY2013 Result Update - Angel Broking

For 4QFY2013, Madras Cements (MC) posted a 35.3% yoy de-growth in its net profit to Rs. 64cr, impacted by weak cement prices, a surge in freight and raw material costs due to higher railway freight fares and higher diesel costs, and with volume growth being modest at just 3.7% yoy. We remain Neutral on the stock.

OPM at 15.2%, down 732bp yoy: For 4QFY2013 MC posted a 5.5% yoy growth in net sales to Rs. 927cr. Top-line growth during the quarter was impacted by modest volume growth and weak realization. Further, change in accounting treatment for inter-segment revenue suppressed the overall revenue, although it didn't have any impact on the profit. The OPM for the quarter stood at 15.2%, down 732bp on a yoy basis, despite the higher realization, on account of increase in raw material, freight costs and other expenses. The EBITDA/tonne fell by 31.7% yoy and 39.2% qoq to Rs. 629.

Outlook and valuation: Going ahead, we expect MC to post a 12.4% and 15.7% CAGR in its top-line and bottom-line respectively over FY2013-15. At the current market price, the stock is trading at a valuation of US$79/tonne on current capacity (US$59 on FY2015E capacity), which we believe is fair. We continue to maintain our Neutral recommendation on the stock.

Source : Equity Bulls

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