|
|
|
|
Articles: Stock Market | India Cements
- Prof. 00782 Maverick
| |
Riding on the back of a strong price recovery in South India, the average price realisation per ton of cement grew by 25% to Rs 3137 per ton during the September quarter of 2006-07 compared with Rs 2,520 a ton for the same quarter last year. The topline at Rs 591cr showed a growth of 32% (yoy) and up by 6.4% (qoq) despite the monsoon season. Operating margins almost doubled to 33.4% from 17.4% (yoy) shows the cost effective measures adopted by the company. The company has reported a small decline in per unit power consumption and savings in raw materials cost by increasing the blending ratio.
Large Capacity expansion plans; Well placed in Sothern India; Valuations attractive
India Cement is looking at adding capacities to its existing facilities for this the company had taken up upgradation of its units and modernisation of one of its plants at an estimated cost of about Rs 300cr and on completion will increase 2mn ton of additional cement capacity. These projects are expected to be completed between July and December 2007.
India Cements Ltd, which has reported a profit for the second straight year, plans to have a pan-India footprint. Apart from signing up for a two million tonnes a year cement plant in Himachal Pradesh, the company is scouting for mining leases in Rajasthan and Madhya Pradesh for setting up plants in these States. The plant in Himachal Pradesh will come on stream in FY10.
Capacity utilisation of cement plants in Tamil Nadu (TN), Andhra Pradesh (AP) and Karnataka, which are the major markets for India Cements, is close to 100%. The post- monsoon period from November to June is likely to be very good this year. There is little excess capacity at the moment. Blending can result in some increase in production, but not much. With prices and demand growth in its key southern market looking good and various cost-cutting measure in place (including repayment of debt), the company seems poised to deliver good results in forthcoming quarters as well.
The stock is currently running at a P/E of 10.4 times the annualized earnings with valuations on EV/ton basis is at $157 seems attractive for a company which is highly cost efficient and large expansion plans all over the country and with Demand-Supply situation to remain tight for next two years coupled with prices to remain firm in future make this stock an attractive bet to invest. We expect that the stock will continue to deliver decent returns in future.
| Be first to comment on this Article!
| |
|
|
|
 |
| Advertisements |
|
|
|
|
| Advertisements |
|
.gif)
