MOSL: INDIA CEMENTS (Neutral)-Miss led by lower volumes-Demand recovery in South India remains key
India Cements: Miss led by lower volumes; Demand recovery in South India remains key
(ICEM IN, Mkt Cap USD0.4b, CMP INR84, TP INR80, 5% Downside, Neutral)
- Volume decline led by demand weakness in South India: 2QFY20 volumes declined 13% YoY to 2.67mt; blended realizations declined 3% QoQ to INR4,671/t due to weaker prices in the southern markets. Thus, net sales declined 10% YoY to INR12.5b (v/s est. INR13.4b).
- EBITDA declines 5% YoY: EBITA/t came in at INR552 (higher than est. INR513). However, given the weaker volumes, EBITDA was down 5% YoY to INR1.5b (in-line). Margins expanded 0.65pp YoY to 11.8%, while PAT increased 6x YoY to INR87m (v/s est. INR81m).
- 1HFY20 Performance: Sales/EBITDA/PAT increased -1%/25%/3.6x. We expect 2HFY20 to record -1%/13%/21% increase for the same. Operating cash flows have improved from INR619m in 1HFY19 to INR1.6b in 1HFY20.
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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