India Cements, net sales for Q4FY12 grew by 11.8% Y-o-Y to Rs 11,185 mn. This was mainly driven by higher realisation. However, owing to sluggish demand in southern India especially Andhra Pradesh volumes for Q4FY12 remained flat at 2.53 mn on Y-o-Y basis. EBIDTA margins for Q4FY12 stood at 19.5% showing an increase of 136bps Y-o-Y. However, margin declined by 141bps Q-o-Q. Net profit for Q4FY12 grew by 17.4% Y-o-Y to Rs 649 mn. The strong growth was attributable to stable pricing in south."
"Blended realisation of cement per bag for Q4FY12 stood at Rs 221/bag showing a growth of 12% Y-o-Y. Thanks to the production discipline by players in southern India, result of which company has been able to report a stable set of earnings. EBIDTA margins for Q4FY12 stood at 19.5% showing an increase of 136bps on Y-o-Y basis. This was mainly on account of more than proportionate increase in realisation as against an increase in cost of production. On per bag basis the cost of production for Q4FY12 rose by 10.1% Y-o-Y to Rs 178, whereas realisation grew by 12% Y-o-Y to Rs 221. The power & fuel costs which accounted for 35.2% of the total expense rose by 26.8% Y-o-Y for Q4FY12 on per bag basis and the freight costs which accounted for 23.5% of total expenditure rose by 13.0% Y-o-Y on per bag basis. However, the raw material expense which accounted for 16.4% of total expenditure declined by 13.8% Y-o-Y on per bag basis and other expense which accounted for 14.6% also declined by 2.7% Y-o-Y. Net profit for Q4FY12 grew by 17.4% Y-o-Y to Rs 649 mn and net profit margins remained flat at 5.8% Y-o-Y, showing an increase of 28 bps driven by growth in realisation for cement."
"We maintain our target of Rs 134.5 arrived based both on replacement costs and EV/EBIDTA on a differential weightage and with a BUY rating. The results for the Q4FY12 have been above our estimates, however, the contribution from growth in volumes remained muted. Contrary to this strong pricing trend has helped company post good numbers. The demand for cement during the March’12 was muted in southern India especially in Andhra Pradesh. We expect the demand for cement to pick up from May’12 and remain strong till start of monsoon. However, owing to recent intervention by CCI on cartelisation we don’t expect a strong up tick in cement prices in Q1FY13. We believe that RBI’s move (50bps cut in repo) might trigger demand from housing and industrial segment in the near term. Coal production at Indonesian mines expected to commence operation from Q1FY13 might help company in reducing its coal costs and also with recent commissioning of its new 50 MW captive power plant at Sankari Nagar to aid ICL in further reducing the power and fuel costs," says GEPL Capital research report
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