Madras Cements Ltd - FY13 Annual Report Analysis - Emkay

Reco: ACCUMULATE
CMP: Rs 199
Target Price: Rs 250

- MCL to set up a 1mtpa grinding unit at Vizag (slated for commissioning in Q2FY14). The unit to help expand reach in Vizag and Odisha markets, apart from helping freight cost reduction

- FY13 debt reduction of just Rs0.5bn: higher working capital (Rs2.5bn) and higher capex restrict debt repayment. Interest cost higher by 100bps, led by the rollover of low-cost debt

- Cut FY14E/15E EPS by 10%/7%, led by lower cement realizations and high currency assumptions (increases MCL's imported fuel cost). Reset the target price to Rs250

- MCL remains the preferred mid-cap pick. Low cost structure, robust FCF and minimal capex plans to drive accelerated debt repayment, helping stock re-rating. ACCUMILATE.

Source : Equity Bulls

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