MOSL: SANGHI INDUSTRIES (Buy)-EBITDA beat on lower-than-estimated cost-expansion plans on track
MOSL: SANGHI INDUSTRIES (Buy)-EBITDA beat on lower-than-estimated cost-expansion plans on track
(SNGI IN, Mkt Cap USD0.2b, CMP INR62, TP INR78, 25% Upside, Buy)
** Healthy growth in volumes: 4QFY19 volumes increased 14% YoY to 0.71mt as sales improved in Maharashtra. Realization declined 5%YoY to INR3,903/t; this resulted in revenues of INR2.7b (+9% YoY) (in-line).
** EBITDA/t declines marginally: Unitary cost decreased 5% YoY to INR3,252/t (our est. INR 3,543/t) due to savings in freight cost/t and power & fuel cost/t. However, due to weaker realizations, EBITDA/t decreased 2% YoY to INR651, with EBITDA up 12% YoY at INR460m (our est. INR381m). Depreciation was lower by INR45.2m as the company changed the useful life of Plant & Machinery and the residual value, effective 1st Jan’19. PAT increased 42% YoY to INR264m (our est. INR40m).
** Management commentary: (1) Raw material cost in 4QFY19 was higher due to clinker purchase at higher prices. Also, proportion of blended cement increased to 36% in 4QFY19 v/s 31% in 4QFY18, as a result of which higher cost of fly ash was incurred. (2) Lignite constituted 25% and coal constituted 75% of the fuel mix. (3) The company’s expansion program is on track; 85-90% of the ordering is done; 70% of the civil work has been completed.
Sanghi Industries Limited is an India-based company engaged in the manufacturing and sale of cement and clinker. The Company manufactures and markets cement and cement products in domestic and export markets. It offers products, including Ordinary Portland Cement (OPC) and Portland Pozzolana Cement (PPC). The Company offers cement under the brand name Sanghi Cement. The Company produces 53 Grade OPC and PPC Cement. It provides Shakti Rath service, which is a mobile concrete testing laboratory having all the necessary equipment and facilities required for onsite concrete testing. The Company operates over 40 Shakti Raths in Gujarat. The Company has established approximately 45 consumer care centers at the cities and towns of Gujarat, Rajasthan and Kerala. The Company's manufacturing facilities are located at Sanghipuram, Abdasa taluka of Kutch district in Gujarat. Its manufacturing plant has production capacity of approximately 4.1 million tons cement per annum.
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