MOSL: INDIA CEMENT (Neutral)-Marginal miss led by lower volumes
India Cement: Marginal miss led by lower volumes
(ICEM IN, Mkt Cap USD0.3b, CMP INR77, TP INR80, 3% Upside, Neutral)
Demand revival in South-India key
- India Cement’s (ICEM) 3QFY20 results highlight the demand slowdown in South India. Overall, volumes declined 10% YoY with pricing down 4% QoQ on demand weakness while EBIDTA/t reduced 12% QoQ led by lower realizations.
- We maintain our FY20/FY21E estimates and Neutral rating and believe that demand revival in the South and subsequent pricing improvement will remain the key monitorables.
EBITDA marginally lower than estimates due to lower volume
- Volumes declined 10% YoY to 2.66mt in 3QFY20. Blended realizations declined 4% QoQ to INR4,478/t due to weak prices in the South. Thus, net sales declined 10% YoY to INR11.9b (v/s est. INR12.5b).
- EBITDA/t came in at INR484/t (in-line). However, given the lower volumes, EBITDA was down 5% YoY to INR1.3b (5% lower than est.). Margins expanded 0.56pp YoY and declined 1pp QoQ to 10.8%.
- The company reported tax inflow of INR48m v/s zero tax rate in 3QFY19.
- ICEM reported net loss of INR54m v/s profit of INR31m in 3QFY19 (v/s est. loss of INR37m).
India Cements is engaged in the manufacturing and selling of cement. Co. also is engaged in providing power generation from wind farms. Co. owns two brands of cement in India namely: Sankar cement and Coromandel cement. Through its subsidiaries, Co. is engaged in the investment of equity shares; the transportation of coal and other raw materials; and the provision of logistics support in the form of contract and market truck management and scheduling. Co.'s manufactured products include cement, calcium carbide and textiles. As of Mar 31 2003, production and sale of cement were 4,946,000 tonnes and 4,999,000 tonnes, respectively.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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