cement shree cement ltd. initiating coverage -...
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INDIA
Institutional Research
CEMENT
Initiating Coverage
Shree Cement Ltd.
Initiating Coverage Networth Research is also available on Bloomberg and Thomson
Date: 7th October, 2011
Analyst: Suhani Patel [email protected]
Ph. No. 022 3022 5900
Shree Cement Ltd (SCL) is one of the fastest growing Indian cement manufacturers having leading position in North India with a market share of 20%. Currently, the company has total cement capacity of 13.5 million tonnes and power capacity of 260 MW. SCL is one of the most energy efficient companies in the cement industry.
Cement demand, which has been to‐date robust in NorthIndia, is set to get further boost on heightened construction activities with the exit of extended 2011 monsoon. On the other hand the merchant power sales volume to increase substantially in FY12‐13E with the commissioning of 300MW thermal power plant. The stock is currently available at a steep discount to its peers. We initiate coverage with an “Accumulate” rating.
Investment Theme
Enough scope to grow in line with industry
With capacity utilization as on July 2011 at 72% (vis‐à‐vis FY11 utilization level of 74%) we believe SCL has enough scope in volume growth during FY11‐13E. We presume SCL to deliver 8% CAGR in cement volume over FY11‐13E. With no near term capacity expansion, FCF is set to grow at 110% CAGR, which will boost EPS by 35%.
Lowest cost producer, highest margin earner
Despite its dependence on pet coke/imported coal, SCL enjoys higher EBITDA margins over peers thanks to its 1) 100% captive power usage 2) low power consumption at 80units/tonne compared to industry average of 85‐90units/tonne 3) lower freight cost due logistical positioning of its facilities close to the end market.
Power capacity to double by FY12
SCL’s is ramping up its current power capacity by 300MW during Q3FY12E to 560 MW. After meeting its own requirement for cement division of 120 MW, 440MW power is to be sold at merchant tariffs. Power vertical’s contribution to revenue is to grow to 18% FY13E from current level of 9%. Though the merchant power tariffs have reduced significantly over the last one year, we don’t see them dropping below Rs 4/Kwh going forward.
Long term expansion plans to have pan India presence
SCL plans to augment its cement capacity from current 13.5MTPA to 20MTPA by FY16E through Greenfield capacities in Karnataka and Chhattisgarh for which land acquisition processes are almost completed.
Valuation
On EV/EBITDA basis, the company is trading at 7.7 x FY12E EBITDA and 4.9 x FY13E EBITDA respectively. We value its cement business at 6x FY13E EBITDA and power business at 4x FY13E EBITDA. Our SOTP based target price is Rs 2071 per share, implying 12% upside.
Rating Accumulate Target Price ` 2071 CMP ` 1842 Upside 12%
Sensex 16320
Key Data Bloomberg Code SRCM IN
Reuters Code SHCM.BO
NSE Code SHREECEM
Current Share o/s (mn) 34.84
Diluted Share o/s (mn) 34.84
Mkt Cap (`bn/$mn) 64/1296.9
52 WK H/L (`) 2350/1500
Daily Vol. (6M NSE Avg) 31303
Face Value (`) 10
Beta 0.76
1 USD/` 49.35
Shareholding Pattern (%) Promoters 64.78
FII 6.23
Others 28.99
Price Performance (%) 1M 6M 1yr
Shree Cement 11.3 7.0 ‐11.2
Sensex ‐5.3 ‐15.6 ‐22.7
Source: Bloomberg; *As on 5th Oct., 2011
(Rs cr)
Revenue YoY% EBIDTA Margins (%) PAT Margins (%) Fully DEPS ROE (%) RoCE (%) P/E EV/tonne EV/EBIDTA
2010 3632.1 34.0 1502.5 41 676.1 19 194.1 36.9 26.9 9.5 120.4 4.3
2011 3511.9 ‐3.3 885.6 25 209.7 6 60.2 10.6 8.4 30.6 92.9 7.6
2012E 4055.9 15.5 868.4 21 66.4 2 19.1 3.3 6.5 96.6 91.6 7.7
2013E 4910.7 21.1 1194.5 24 381.6 8 109.5 16.1 17.2 16.8 76.1 4.9
2014E 5261.1 7.1 1359.2 26 604.2 11 173.4 21.0 21.9 10.6 72.1 4.0
Source: Company, NetworthResearch
2 Initiating Coverage
Investment Theme
Enough scope to grow in line with industry
SCL management has foresight of anticipating the demand which is responded through regular capacity enhancement programmes, which is well reflected in the sales volume of 24% CAGR against industry average of 9% during FY06‐FY11. With 13.5 MTPA installed capacity, SCL has enough scope to grow in the medium term in line with the industry even with no further capex on cement capacity expansion in near future.
Exhibit 1: Company’s Demand Growth vs. Industry Demand growth
Source: Company, Networth Research
Lowest cost producer, highest margin earner
….owing to 100% captive power usage
SCL’s 100% power requirement for its cement capacity is met internally since FY09 which has resulted into highest operating margins compared to its peers. It is also into merchant power business which helps to offset the cyclical nature of the cement business.
Exhibit 2: Captive Power as a % of total power requirement
Source: Company, Networth Research
4.83
6.33 7.74
9.27 9.3410.09
11.0012.09
0%
10%
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60%
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FY07 FY08 FY09 FY10 FY11 FY12 FY13E FY14E
Dispatches (mn tonnes) Growth (yoy%) Industry demand Growth (yoy%)
85%
85%
83%
100%
21%
ACC Ambuja Ultratech Shree cement India cement
3 Initiating Coverage
….owing to low energy costs
The company has been able to maintain its costs mainly by improving its operating efficiencies. Its operating parameters for energy consumption are comparable with the best in the industry. Shree Cement’s energy consumption per ton of cement is around 80 units/tonne vis‐à‐vis industry average of 85‐90 units/tonne.
Exhibit 3: Power Consumption (Units) per tonne
Source: Company, Networth Research
… owing to locational advantage
SCL has the distinct advantage of its plants being located in proximity to its key markets. Consequently, average lead distances for the company are much lower compared to its competitors. Exhibit 4: EBIDTA Margin (%)
Source: Company, Networth Research
8786
79
82
93
70
75
80
85
90
95
ACC Ambuja Shree cement
Ultratech India cement
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
FY07 FY08 FY09 FY10 FY11
ACC Ambuja Shree Cement Ultratech Cement India Cement
In FY11 EBITDA margin was 25% compared to 18% industry average.
4 Initiating Coverage
Stable pet‐coke prices in future will boost the margins
The company continues to use pet‐coke for kiln operations due to its lower ash content (1%). However it has started using low grade imported coal from US together with South African and Indonesian coal for its power plant operations. The management has guided that pet‐coke prices would stabilize with commissioning of IOC refinery at Koyali near Baroda and of HPCL at Bhatinda.
Power capacity to double by 2012
SCL’s current power capacity is 260 MW (out of this 46 MW is waste heat recovery plant) and it will add another 300 MW by Q3FY12 taking its total power capacity to 560 MW. Captive requirement for cement division is 120 MW; balance being surplus is available for sale at merchant tariffs.
Currently merchant tariff rates has slide down to Rs 4 per unit from historical high levels of Rs 6‐6.5 per unit owing to declining power deficit (with significant capacity additions). On the other hand the cost of generation has increased to Rs 3‐3.20 per unit from Rs 2‐2.5 per unit on account of rising imported pet coke/coal prices (SCL is 100% dependent on imported petcoke/coal). So EBITDA from power segment is likely to remain low on ~ 84% CAGR in sales volume estimated over FY11‐13E. We believe subdued merchant tariff would look up as a) the overall demand for power increases and b) the new PPAs are entered into at higher tariffs due to increased coal costs going forward supporting the merchant tariffs. However, we have not assumed any uptick in the merchant power rate in our estimation. Any hike in the regulated tariff in near term will give some head‐room to merchant power producers, which remains upside risk in our view.
Exhibit 5: Units Sold and EBITDA/unit‐ Power Business
Source: Company, Networth Research
A move towards Pan India presence
SCL has increased its cement capacity to 13.5MTPA by commissioning 1.5MTPA cement grinding unit near Jaipur in Rajasthan. It is working on further increasing its cement capacity to 20MTPA by FY16E with penetration to other regions of India. It has already completed 95% of land acquisition in Karnataka and around 93% in Chhattisgarh. The total project cost for these expansions together with 100 MW captive power plants is expected to be around Rs 3500 Cr.
Positive free cash flows to strengthen balance sheet
The company will commission 300 MW of thermal power plant at a cost of Rs 1200 Cr in Q3FY12. Of this 1200 Cr, Rs 800 Cr has already been spent and rest Rs 400 Cr is lined up for FY12E. With no major capex for cement segment and factoring in the balance capex of Rs 400 Cr for power plant, we estimate free cash flow of the company to be positive over the next three years which would help bring down the D/E ratio to 0.5 in FY14E from 1 in FY11.
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FY10 FY11 FY12E FY13E FY14E
Power sold (million Kwh) EBITDA per unit
Lower merchant tariff rates; already factored in to CMP.
5 Initiating Coverage
Exhibit 6: D/E ratio to reduce to 0.5 in FY14E
Source: Company, Networth Research
Capacity utilisation in North to improve
SCL has 72% market exposure to North region, with its leadership of 20% market share. North region is expected to see slowdown in capacity expansion in FY12E, which will improve the utilisation by 400bps to 82% in FY12E from 78% in FY11. Further, we expect the utilization level to rise to 91% in FY14E on revival in the overall economy. In contrast severity of capacity overhang is far lesser than South where utilisation rates have dropped to 64% and are estimated to remain at 60% over the next two years.
Key demand drivers in North
Semi‐urban and rural housing projects especially in Punjab and Haryana
Urban infrastructure projects in cities like NCR and Chandigarh
Many hydro power projects in Himachal Pradesh
Several road projects
Exhibit 7: North Supply‐Demand Matrix
North FY08 FY09 FY10 FY11 FY12E FY13E FY14E
Effective cement capacity (mtpa) 38 48 51 62 66 69 74
Production (MT) 36 41 47 49 54 60 67
Capacity utilisation (%) 95% 85% 92% 78% 82% 87% 91%
Despatches including exports (MT) 36 41 47 49 54 60 67
Despatch growth (%) 14% 15% 3% 11% 11% 12%
Incremental supply (MT) 10 3 11 4 3 5
Incremental Demand (MT) 5 6 2 6 6 7 Source: CMA, Networth Research
Investment Concerns
Lower than estimated merchant tariff rates
Lower than estimated off‐take in the cement would have negative bearing on volumes as well as realization
Significant increase in pet coke/ imported coal prices
‐1939‐1199
‐6131
1995829
8790
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2008 2009 2010 2011 2012E 2013E 2014E
Free Cash Flow D/E ratio
6 Initiating Coverage
Industry outlook
Long term cement demand story remains intact
Cement grew at half pace of 0.6 times GDP in FY11 against the backdrop of elasticity of demand in relation to the GDP of 1.2 observed during last two decades. Resilience in demand can be gauged from empirical data where in sharp demand pull back has been recorded soon after the multiplier declined materially. Exhibit 8: Cement Demand Growth (%) and GDP Growth (%)
Source: CMA, Networth Research
Cement intensity in Indian economy to improve in future
India’s per capita cement consumption of 136 kg is well behind the global average per capita consumption of 508 kg. India’s consumption is quite poor in contrast to China’s 1002 kg. Notable is the fact that India is just behind China in terms of pace of GDP growth at the moment. This factor suggests strong long term growth opportunity.
M&A opportunities to sustain valuation ahead
Due to secular growth possibilities, India remains a key interest area among global cement majors mainly from Europe viz, Holcim, Lafarge, Heidelberg, Cemex, Italcementi among others. All these companies consider India as a key growth market and are constantly looking to increase their presence by way of expansion and M&As.
Basic need of housing remains key demand driver
The Key consumption drivers for cement include housing (60%), commercial & industrial (15%) and infrastructure construction (25%). As per XIth Plan Document, India has a housing shortage of 74 mn units, of which 47 million units pertaining to rural housing alone. The urban housing shortage is estimated at 27 million units with more than 97% being required for economically weaker sections. With rising urbanization and rural India’s transformation from kuchha/semi kuchha houses to pucca houses, housing segment should continue to remain the key driver.
We expect the continued government focus on infrastructure investments to result in higher consumption of cement over the 12th FYP. Government is planning to increase infrastructure spending as a percentage of GDP to 10.7% in 2017 from around 7.9% in 2011. This has resulted in an investment requirement of around $1000 bn during the 12th FYP.
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0.00%
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8.00%
12.00%
16.00%
20.00%
FY2000
FY2001
FY2002
FY2003
FY2004
FY2005
FY2006
FY2007
FY2008
FY2009
FY2010
FY2011
Cement demand growth (%) GDP growth (%)
7 Initiating Coverage
Total 11th Plan Revised
Base Year (11th Plan)
12th Five Year Plan Total 12th
Plan Estimated
FY2012E FY2013E FY2014E FY2015E FY2016E FY2017E GDP at Market Prices (Rs bn) 271917 63142.7 68825.5 75019.8 81771.6 89131 97152.8 411900.6 GDP Growth 8.80% 9.00% 9.00% 9.00% 9.00% 9.00% 9.00% 9.00% Infra GCF (Rs bn) 20542 5283.2 6194.3 7126.9 8095.4 9180.5 10395.3 40984.1 Infra GCF as a % of GDP 7.60% 8.40% 9.00% 9.50% 9.90% 10.30% 10.70% 10.00% Total GCF $ bn 513.6 132.1 154.9 178.2 202.4 229.5 259.9 1024.6
Total 11th Plan Revised
Base Year (11th Plan)
12th Five Year Plan Total 12th
Plan Estimated
FY2012E FY2013E FY2014E FY2015E FY2016E FY2017E GDP at Market Prices (Rs bn) 271917 63142.7 68825.5 75019.8 81771.6 89131 97152.8 411900.6 GDP Growth 8.80% 9.00% 9.00% 9.00% 9.00% 9.00% 9.00% 9.00% Infra GCF (Rs bn) 20542 5283.2 6194.3 7126.9 8095.4 9180.5 10395.3 40984.1 Infra GCF as a % of GDP 7.60% 8.40% 9.00% 9.50% 9.90% 10.30% 10.70% 10.00% Total GCF $ bn 513.6 132.1 154.9 178.2 202.4 229.5 259.9 1024.6
Lok Sabha elections also to drive demand
Generally demand is seen picking up during the general election time, as incumbent Government tries to meet some of the infrastructure related commitments. Over the next two to three years, besides general election, many important State elections are lined up in key cement consuming States like Uttar Pradesh, Gujarat, Punjab, Madhya Pradesh, Maharashtra and Rajasthan. These electoral developments will keep alive demand till FY14 accompanied with recovery in domestic economy.
Capacity expansion to decelerate
Cement players have announced huge capacity expansion plans in last two years. Majority of expansions have been completed and industry has already added huge capacity of 72 million tonnes during FY09‐11. Days ahead expansion is likely to take back seat as no major expansion plan has been announced by any players (except Ultratech of 9MTPA) and players are also strategically delaying their capacity augmentation plans. All‐India effective utilization in FY12E is likely to bottom out at 75% and then gradually increase to 80% by FY14E.
Exhibit 9: All‐India cement Supply-Demand Matrix
FY07 FY08 FY09 FY10 FY11 FY12E FY13E FY14E Installed capacity 166 198 219 251 291 304 330 345 (%) Change 5% 19% 11% 15% 16% 4% 9% 5% Additions 8.4 32 21 32 40 13 26 15 Effective Capacity 157 173 203 234 271 295 316 334 Cement Production 156 168 181 200 208 221 241 266 (%) Change 10% 8% 8% 11% 4% 7% 9% 10% Capacity Utilisation 99% 97% 89% 86% 77% 75% 76% 80% Domestic Dispatches 150 164 177.8 198 205 218 238 263 Exports 6 4 3.2 2.2 3 3 3 3 Total Dispatches 156 168 181 200 208 221 241 266 (%) Change 10% 8% 8% 11% 4% 7% 9% 10% Incremental Supply 7 16 30 31 37 24 21 18 Incremental demand 14 12 13 19.2 7.8 13 20 25
Source: CMA, Networth Research
8 Initiating Coverage
Valuation
On EV/tonne basis, currently the cement business is available at $92/ton at 30% discount to the replacement cost. On EV/EBITDA basis, SCL is trading at 7.7x and 4.9x its FY12E and FY13E EBITDA respectively. With increasing share of the power, we value the company based on SOTP method. We have assigned different EV/EBITDA multiple to cement business and power business by comparing to its peers.
We value the cement business at 6 x FY13E EBITDA, 25% discount to its peers. We value the company’s power business at 4x FY13 EBITDA, 40% discount to players like Tata Power and Adani Power, considering the size (capacity) and volatile realizations in merchant tariffs, whereas Adani Power and Tata Power’s tariffs are determined by power purchase agreements.
Our SOTP based target price is Rs 2071 per share, implying 12% upside from CMP.
Exhibit 10: Valuation Table
Valuation Methodology FY13E Cement EBITDA 972.8 EV/EBITDA (x) 6.0 Cement EV 5836.6 Power EBITDA 209.6 EV/EBITDA (x) 4.0 Power EV 838.2 Total EV of the firm 6674.8 Debt 1507.9 Cash & cash equivalents 2050.0 Market Value 7216.9 No.of shares 3.5 Target value 2071.4
Source: Company, Networth Research
Exhibit 11: One year forward EV/EBITDA
Source: Company, Networth Research
02000400060008000100001200014000160001800020000
Jan‐2007
May‐2007
Sep‐2007
Jan‐2008
May‐2008
Sep‐2008
Jan‐2009
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Jan‐2010
May‐2010
Sep‐2010
Jan‐2011
May‐2011
EV
2 X
4 X
6 X
8 X
10 X
12 X
9 Initiating Coverage
Company Background
Shree Cements (SRCM) is the largest cement manufacturer in North India and among the top cement manufacturing groups in the country. The company is being professionally managed by its promoters Shri B. G. Bangur, chairman and Shri H. M. Bangur, managing director. The company started its operations in 1985 with a total production capacity of 0.6 MTPA which has been increased to 13.5 MTPA as on date. The company further plans to increase its production capacity to 20 MTPA by the end of FY16. It follows a multi brand strategy and sells cement under the brands of Shree Ultra, Bangur and Rockstrong.
The company is also engaged in the power sector with power generation capacity of 260 MW which is set to go to 560 MW by Q3FY12.
Exhibit 12: Current Cement and Power Capacity
Cement Capacity Mn tonnes per annum Power Capacity MWBangur Nagar, Beawar Rajasthan 3 Bangur Nagar, Beawar Rajasthan 42Bangur City, Ras Rajasthan 3 Bangur City, Ras Rajasthan 172Khushkhera GU Rajasthan 3 Waste Heat Recovery Plant 46Suratgarh Rajasthan 1.2 Total 260
Roorke Uttarkhand 1.8Jaipur Rajasthan 1.5Total 13.5
Source: Company, Networth Research
The company has a diversified sales mix with 72% of its sales volume arising from North India and 27% of volume from central region.
Exhibit 13: Sales Breakup (%)
Source: Company, Networth Research
27%
23%17%
12%
8%
6%4%
2% 1%
Rajasthan
Uttar Pradesh
Haryana
Delhi
Punjab
Uttarakhand
Madhya Pradesh
J&K
Bihar
10 Initiating Coverage
Key Management
B. G. Bangur, Executive Chairman
He holds a Bachelors of Commerce (Hons.) from Calcutta University. He is also the director in The Didwana Industrial Corporation Limited, NBI Industrial Finance Company Limited, Shree Capital Services Limited, Khemka Properties Private Limited and Digvijay Finlease Limited. He is actively associated with various Charitable Institutions and trusts.
Prashant Bangur, Executive Joint President
He has done his MBA in Finance and Logistic from Indian School of Business.
M. K. Singhi, Executive Director
He is a fellow Chartered Accountant and a Science and Law Graduate. He joined the Company as President in January 1995 and has 31 years experience of working at senior positions. He is the leader of Indian Cement Sector Task Force for Energy Conservation, appointed by Bureau of Energy Efficiency, Ministry of Power, and Government of India. He is a member of Cement Sustainability Initiative (CSI) of World Business Council for Sustainable Development. He is also a member of Cement Task Force of Asia Pacific Partnership on Clean Development and Climate. He is the President of Rajasthan Cement Manufacturers Association. He is also on the Board of Shree Cement Marketing Limited.
H. Bangur, Managing Director
He is a Chemical Engineer from IIT, Mumbai and he brings to the board technical insights which are a driving force of the technical excellence achieved by the Company. Bangur is also a Director in the Kamla Company Limited. He was the President of Cement Manufacturers' Association (CMA), the prime body for co‐ordination, policy making and co‐operation of the cement industry in India.
11 Initiating Coverage
Financial Outlook
Exhibit 14: Cement Key Assumptions
Particulars FY10 FY11 FY12E FY13E FY14E Installed Capacity (million TPA) 10.2 13.5 13.5 13.5 13.5 Effective capacity (million TPA) 9.3 12.8 13.5 13.5 13.5 Capacity utilisation (%) 101% 74% 75% 81% 90% Cement sales volume (million tonnes) 9.3 9.3 10.1 11.0 12.1 Change(%) 20% 1% 8% 9% 10% Clinker sales volume (million tonnes) 1.0 0.9 1.0 0.9 0.3 Total sales volume (mn tonnes) 10.2 10.3 11.1 11.9 12.4 Net blended realisation per tonne (Rs) 3,372.2 3,113.7 3,238.2 3,432.5 3,604.1 Change(%) 8% ‐8% 4% 6% 5% Total cement sales (Rs million) 34,551.7 31,964.9 35,915.4 40,808.0 44,659.4 Cement EBITDA (Rs million) 13,507.0 7,267.6 7,743.6 9,727.7 11,572.0 Cement EBITDA/tonne (Rs) 1318.3 707.9 698.2 818.2 933.9
Source: Company, Networth Research
Exhibit 15: Power key Assumtions
Particulars FY10 FY11 FY12E FY13E FY14E Installed capacity (MW) 214.0 260.0 372.5 560.0 560.0 Power sold (million Kwh) 264.0 621.0 1161.0 2074.8 1987.9 Realisation per unit 6.7 5.1 4.0 4.0 4.0 Power revenues (Rs mn) 1769.5 3154.0 4643.9 8299.0 7951.6 Cost per unit 2.0 2.6 3.0 3.0 3.1 EBITDA per unit 4.7 2.5 1.0 1.0 0.9 EBITDA (Rs) 1239.1 1554.4 1587.5 2095.6 1825.8
Source: Company, Networth Research
12 Initiating Coverage
Financial Summary
Income Statement (Rs.Cr)
Y/E March FY10 FY11 FY12E FY13E FY14E
Net Revenues 3632.1 3511.9 4055.9 4910.7 5261.1
Growth % 34.0 ‐3.3 15.5 21.1 7.1 COGS 303.1 389.2 443.4 453.9 494.5 Gross Profit 3329.0 3122.7 3612.5 4456.8 4766.6 Growth % 35.7 ‐6.2 15.7 23.4 7.0 Power & Fuel Cost 610.5 912.3 1268.4 1591.3 1655.2 Freight Cost 629.8 614.1 690.0 769.1 833.7 Employee Cost 158.6 198.5 210.2 260.3 223.1 SG&A Expenses 427.6 512.2 575.4 641.5 695.4 Core EBITDA 1502.5 885.6 868.4 1194.5 1359.2 Growth % 57.6 ‐41.1 ‐1.9 37.5 13.8 Other Income 128.4 124.3 91.6 107.5 116.9
EBITDA 1630.9 1009.9 960.0 1302.0 1476.0 Depreciation 570.4 675.8 696.3 635.0 539.2 EBIT 1060.4 334.2 263.7 667.0 936.8 Growth % 27.6 ‐68.5 ‐21.1 152.9 40.5 Interest Exp 118.5 170.9 180.7 158.2 131.2 EBT 942.0 163.2 83.0 508.8 805.6 Tax 191.8 ‐99.4 16.6 127.2 201.4 PAT 676.1 209.7 66.4 381.6 604.2 Growth % 17.0 ‐69.0 ‐68.3 474.6 58.3
Cash Flow Statement (Rs.Cr)
Y/E March FY10 FY11 FY12E FY13E FY14E
PAT 676.1 209.7 66.4 381.6 604.2
Depreciation 570.4 675.8 696.3 635.0 539.2
Changes in WC 73.9 129.4 ‐279.8 ‐37.7 23.3
Cashflow from Operations 1320.4 1014.9 482.9 979.0 1166.7
Capital Expenditure ‐1184.1 ‐1151.3 ‐400.0 ‐100.0 ‐700.0
Investments ‐747.4 395.8 0.0 0.0 0.0
Misc items ‐2.01 ‐59.85 0.00 0.00 0.00
Cashflow from Investments ‐1933.5 ‐815.4 ‐400.0 ‐100.0 ‐700.0
Cashflow from Financing 557.2 ‐155.1 ‐10.3 ‐558.9 ‐193.3
Net Change in Cash ‐55.9 44.4 72.7 320.0 273.4
Balance Sheet (Rs.Cr)
Y/E March FY10 FY11 FY12E FY13E FY14E
Cash and Equivalent 416.4 460.8 533.5 853.5 1126.9
Receivables 82.4 108.2 94.3 114.2 122.4
Inventories 358.1 404.2 490.8 558.4 557.4
Loans and Advances 714.0 443.1 668.2 809.0 866.7
Other Assets 23.7 94.7 94.7 94.7 94.7
Investments 1592.2 1196.5 1196.5 1196.5 1196.5
Gross Fixed Assets 2950.9 4042.1 5242.1 5342.1 5442.1
Net Fixed Assets 752.0 1167.1 1670.7 1135.7 696.5
CWIP 967.4 1027.8 227.8 227.8 827.8
Application of Funds 4906.2 4902.5 4976.6 4989.8 5489.0
Accounts Payable 171.5 122.3 229.2 273.8 287.8
Other Liabilities 295.4 504.1 461.7 559.0 598.9
Provisions 499.9 282.0 235.5 284.1 318.5
Deferred Tax Liabilities 0.0 0.0 0.0 0.0 0.0
Loan Funds 2106.2 2007.9 2007.9 1507.9 1407.9
Reserves and Surplus 1798.4 1951.3 2007.5 2330.1 2841.0
Equity Capital 34.8 34.8 34.8 34.8 34.8
Sources of Funds 4906.2 4902.5 4976.6 4989.8 5489.0
Financial Ratios
Y/E March FY10 FY11 FY12E FY13E FY14E
Core EBITDA margins (%) 41.4 25.2 21.4 24.3 25.8 Net Profit Margins (%) 18.6 6.0 1.6 7.8 11.5 Return
ROE (%) 36.9 10.6 3.3 16.1 21.0 ROCE (%) 26.9 8.4 6.5 17.2 21.9 Liquidity and Gearing Cash Conversion Cycle 52.9 75.6 67.1 56.5 55.3 Current Ratio 1.6 1.7 2.0 2.2 2.3 Debt/Equity 1.1 1.0 1.0 0.6 0.5 Interest Cover 9.0 2.0 1.5 4.2 7.1 Per Share FDEPS 194.1 60.2 19.1 109.5 173.4 Operating CashflowPS 379.0 291.3 138.6 281.0 334.9
BVPS 526.2 570.1 586.2 678.9 825.5 Valuation Price/Earning 9.5 30.6 96.6 16.8 10.6 Price/BV 3.5 3.2 3.1 2.7 2.2 EV/EBIDTA 4.3 7.6 7.7 4.9 4.0 EV/Tonne (cement) 120.4 92.9 91.6 76.1 72.1
13 Initiating Coverage
Networth Research: E‐mail‐ [email protected]
Minal Dedhia Banking/Midcaps [email protected] 011‐47399803
Vishal Kothari Pharma/Agrochem [email protected] 022‐30225900
Suhani Patel Construction/Cement [email protected] 022‐30225900
Jignesh Vayda Midcaps [email protected] 022‐30225900
Shruti Raut Logistics/ Retail (Associate) [email protected] 022‐30225900
Siddharth Deshmukh Telecom/I.T (Associate) [email protected] 022‐30225900
Derivatives & Technical Research
Akshata Deshmukh AVP Derivatives & Technical’s [email protected] 022‐30641744 Kekin Maru Derivatives Analyst [email protected] 022‐30641621
Akhil Rathi Research Associate ‐ Derivatives [email protected] 022‐30641746
Institution Sales [email protected]
Viral Malia AVP Institutional Sales [email protected] 022‐30225902
Key to NETWORTH Investment Rankings
Buy: Upside by>15, Accumulate: Upside by +5 to 15, Hold: Upside/Downside by ‐5 to +5, Reduce: Downside by 5 to 15, Sell: Downside by>15
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