SHREE CEMENT LIMITED - Myirisbreport.myiris.com/firstcall/SHRCEMEN_20130430.pdf · Shree Cement Ltd...
Transcript of SHREE CEMENT LIMITED - Myirisbreport.myiris.com/firstcall/SHRCEMEN_20130430.pdf · Shree Cement Ltd...
CMP (Rs) 4500.00
Target Price (Rs) 4950.00
ISIN: INE070A01015
April 30th
, 2013
SHREE CEMENT LIMITED Result Update: Q3 FY13
BUYBUYBUYBUY
Stock Data
Sector Cement
BSE Code 500387
Face Value 10.00
52wk. High / Low (Rs.) 4800.00/2270.00
Volume (2wk. Avg ) 370.00
Market Cap ( Rs in mn ) 156780.00
Annual Estimated Results (A*: Actual / E*: Estimated)
Years FY12A FY13E FY14E
Net Sales 58981.20 56803.64 60211.86
EBITDA 17962.00 17614.39 18903.11
Net Profit 6185.00 10121.79 11454.68
EPS 177.53 290.52 328.78
P/E 25.35 15.49 13.69
Shareholding Pattern (%)
1 Year Comparative Graph
BSE SENSEX SHREE CEMENT LTD
SYNOPSIS
Shree Cement, established in 1985, is today
among 5th largest cement manufacturers in
India, with a capacity of 14 million tons in
eight plants and four grinding units.
During the quarter, the robust growth of Net
Profit is increased by 139.85% to Rs.
2740.90 millions.
Shree Cement Ltd has declared Interim
Dividend @ Rs. 8/- per Equity Share of Rs.
10 each for the financial year 2012-13.
Profit before interest, depreciation and tax
is Rs.4629.20 millions as against Rs.4475.67
millions in the corresponding period of the
previous year.
Shree Cement has informed on operational
performance of the Company for the month
of Feb- 2013.
� Cement production: 9.83 lac tons
� Cement dispatch: 9.67 lac tons
The Planning Commission has projected an
investment of over Rs. 45 lakh crore (about
US $ 1 trillion) during the 12th Plan (2012-
17) to the infrastructure space in cement
industry.
Net Sales and PAT of the company are
expected to grow at a CAGR of 20% and
76% over 2011 to 2014E respectively.
Peer Groups CMP Market Cap EPS P/E (x) P/BV(x) Dividend
Company Name (Rs.) Rs. in mn. (Rs.) Ratio Ratio (%)
Shree Cement Ltd 4500.00 156780.00 177.53 25.35 5.73 200.00
UltraTech Cement Ltd 1901.10 521243.40 96.85 19.63 3.36 80.00
Ambuja Cements Ltd 186.45 287643.30 8.41 22.17 3.08 160.00
ACC Ltd 1237.10 232512.90 56.46 21.91 3.15 300.00
Investment Highlights
Results updates- Q3 FY13,
Shree Cement, established in 1985, is today among
the five largest cement manufacturers in India, with
a capacity of 14 million tons in eight plants and four
grinding units, reported its financial results for the
quarter ended 31st March, 2013. The third quarter
witnesses healthy profitability on account of the
back of robust performance from power sector and
lower depreciation.
Months Mar-13 Mar-12 % Change
Net Sales 14716.30 14780.16 (0.43)
PAT 2740.90 1142.76 139.85
EPS 78.67 32.80 139.83
EBITDA 4629.20 4475.67 3.43
The company’s net profit jumps to Rs.2740.90 million against Rs.1142.76 million in the corresponding quarter
ending of previous year, an increase of 139.85%. Revenue for the quarter declines 0.43% to Rs.14716.30 million
from Rs.14780.16 million, when compared with the prior year period. Reported earnings per share of the
company stood at Rs.78.67 a share during the quarter, registering 139.83% increase over previous year period.
Profit before interest, depreciation and tax is Rs.4629.20 millions as against Rs.4475.67 millions in the
corresponding period of the previous year.
Expenditure :
During the quarter Depreciation is decreased by
46%. Total expenditure in Q3 FY13 was at Rs.
11779.20 million as against Rs.12377.30 million in
Q3 FY12. Other Expenditure was at Rs. 2415.80
millions against Rs. 1887.30 millions in the
corresponding period of the previous year. Freight
and forward charges was at Rs. 2395.30 million and
Cost of Material consumed was Rs. 1406.80 million,
Power and Fuel was at Rs. 3544.90 millions in Q3
FY13 are the primarily attributable to decline of
expenditure.
Segment Revenue
Latest Updates
• Shree Cement Ltd has declared Interim Dividend @ Rs. 8/- per Equity Share of Rs. 10 each for the financial
year 2012-13.
• Shree Cement Ltd has been conferred the Nirmata Rajya Mitra Award by Commercial Taxes Department,
Government of Rajasthan for highest tax payer for the year 2011-12 in "manufacturer category".
• Operational Performance for the month of Feb 2013
Shree Cement Ltd has informed on operational performance of the Company for the month of February -
2013.
Particulars Figure in Lac tons
Cement production for February-13 9.83
Cement dispatch for February-13 9.67
Company Profile
Shree Cement, established in 1985, is today among the five largest cement manufacturers in India, with a
capacity of 14 million tons in eight plants and four grinding units. Shree Cement engaged in the cement and
power sector and it is an energy efficient, environment friendly and sustainable company.
The company has more than trebled its cement capacity in the last 5 years to reach a present cement capacity of
13.5 million tons per annum. Its cement plants are located at Beawar, Ras, Khushkhera, Jobner and Suratgarh in
Rajasthan and Laksar (Roorkee) in Uttarakhand. The company follows a multi-brand strategy and sells cement
under the highly recognized brands of Shree Ultra, Bangur and Rockstrong which together enjoy the largest
market share in high value markets of Rajasthan, Delhi and Haryana.
Shree also has a power generation capacity of 260 MW with plants located at Beawar and Ras in Rajasthan,
including waste heat recovery power plants of 46 MW capacity, which is the largest such capacity in the global
cement industry excluding China. The company is further expanding its power capacity by setting up a 300 MW
(2 x 150MW) power plant at Beawar which is likely to be commissioned by the third quarter of 2011-12 and will
take Shree's overall capacity to 560 MW.
Shree follows a triple bottom-line approach of measuring performance i.e. performance against the benchmarks
of economical, social and environmental benefits. It has received various awards and accolades at the national
and international level for excellence in energy efficiency, environment management and sustainability. Shree is
an active participant at climate change forums and is the first Indian cement company to join the Cement
Sustainability Initiative (CSI) of the World Business Council for Sustainable Development, Switzerland.
Brands:
The company offers a portfolio of three brands; together these brands enjoy the largest market share in the north
Indian markets of Rajasthan, Delhi and Haryana.
o Shree Ultra
Shree Ultra is our flagship brand, contributing to more than half of our sales volume and is the first manifestation
of our strategic move from commodity to brand marketing. Its two variants, Shree Ultra OPC and Shree Ultra Jung
Rodhak Cement are distinctly positioned in the market. Shree Ultra Jung Rodhak Cement through its unique rust
prevention properties has high acceptance amongst brand influencers (masons etc.) and high brand recall
value. The brand, while enhancing its presence in highly educated markets of Delhi has increased its reach in the
interior markets of Madhya Pradesh, Uttrakhand, Uttar Pradesh and Punjab.
o Bangur Cement
Bangur Cement, launched as a premium brand in the market, is designed to meet the high end market segment.
Its unique brand tagline "Sasta Nahin, sabse Achcha", gives it the status of 'top of the market' value brand.
o Rockstrong Cement
Rockstrong Cement is the youngest brand from the Shree stable. It has recorded the highest year on year growth
amongst the three brands of Shree in 2009-10. It holds a position in the market on the promise of high
performance and ability to withstand exceptionally harsh environment conditions. Rockstrong promotions are
carried out through a series of witty hoardings on current topics.
Financial Highlight
Balance sheet as at June 30th, 2012
(A*- Actual, E* -Estimations & Rs. In Millions)
Particulars March (Rs.in.mn) FY12A FY13E FY14E
SOURCES OF FUNDS
Shareholder's Funds
Share Capital 348.40 348.40 348.40
Reserves and Surplus 26990.90 35088.17 42807.57
1. Total Net worth 27339.30 35436.57 43155.97
Non Current Liabilities
Long Term Borrowing 8177.40 5887.73 4710.18
Other Long Term Liabilities 3696.90 3733.87 3752.91
Long Term Provisions 174.10 186.29 193.74
2. Sub-Total-Non Current Liabilities 12048.40 9807.88 8656.83
Current Liabilities
Short Term Borrowings 1433.30 1146.64 997.58
Trade Payables 5842.90 7011.48 7782.74
Other Current Liabilities 11282.60 13539.12 14893.03
Short Term Provisions 1779.50 1388.01 1138.17
3. Sub-Total-Current Liabilities 20338.30 23085.25 24811.52
Total Liabilities (1+2+3) 59726.00 68329.70 76624.32
APPLICATION OF FUNDS
Non-Current Assets
Fixed Assets
Tangible assets 15205.90 18703.26 22076.70
Intangible assets Under Development 4.70 5.64 6.43
Capital Work in Progress 967.30 764.17 794.73
a) Sub-Total- Fixed Assets 16177.90 19473.06 22877.86
b) Deferred Tax Asset 697.40 725.30 747.05
c) Non- Current Investments 13352.00 14553.68 15572.44
d) Long Term loans and advances 2053.00 2360.95 2620.65
1. Sub-Total- Non Current Assets 32280.30 37112.99 41818.01
Current Assets
Current Investment 12000.00 13200.00 14256.00
Inventories 5033.20 5939.18 6830.05
Trade receivables 1810.80 2469.93 3161.51
Cash and Bank Balances 4589.70 5140.46 5675.07
Short-terms loans & advances 3626.80 3974.08 4292.01
Other current assets 385.20 493.06 591.67
2. Sub-Total- Current Assets 27445.70 31216.71 34806.31
Total Assets (1+2) 59726.00 68329.70 76624.32
Annual Profit & Loss Statement for the period of 2011 to 2014E
Value(Rs.in.mn) FY11 FY12 FY13E FY14E
Description 12m 15m 12m 12m
Net Sales 35141.33 58981.20 56803.64 60211.86
Other Income 445.10 1627.80 1487.71 1562.10
Total Income 35586.43 60609.00 58291.35 61773.95
Expenditure -26747.10 -42647.00 -40676.96 -42870.84
Operating Profit 8839.33 17962.00 17614.39 18903.11
Interest -978.26 -2353.60 -2036.18 -2137.98
Gross profit 7861.07 15608.40 15578.22 16765.13
Depreciation -6757.59 -8730.90 -4099.68 -3894.70
Profit Before Tax 1103.48 6877.50 11478.54 12870.43
Tax 993.52 -692.50 -1356.74 -1415.75
Net Profit 2097.00 6185.00 10121.79 11454.68
Equity capital 348.37 348.40 348.40 348.40
Reserves 19513.38 26990.90 35088.17 42807.57
Face value 10.00 10.00 10.00 10.00
EPS 60.19 177.53 290.52 328.78
Quarterly Profit & Loss Statement for the period of 30th Sep, 2012 to 30th June, 2013E
Value(Rs.in.mn) 30-Sep-12 31-Dec-12 31-Mar-13 30-Jun-13E
Description 3m 3m 3m 3m
Net sales 13237.90 14280.30 14716.30 14569.14
Other income 292.00 323.00 427.80 444.91
Total Income 13529.90 14603.30 15144.10 15014.05
Expenditure -9309.70 -10683.10 -10514.90 -10169.26
Operating profit 4220.20 3920.20 4629.20 4844.79
Interest -543.10 -562.90 -447.20 -482.98
Gross profit 3677.10 3357.30 4182.00 4361.82
Depreciation -941.50 -818.30 -1264.80 -1075.08
Profit Before Tax 2735.60 2539.00 2917.20 3286.74
Tax -454.30 -364.60 -176.30 -361.54
Net Profit 2281.30 2174.40 2740.90 2925.19
Equity capital 348.40 348.40 348.40 348.40
Face value 10.00 10.00 10.00 10.00
EPS 65.48 62.41 78.67 83.96
Ratio Analysis
Particulars FY11 FY12 FY13E FY14E
EPS (Rs.) 60.19 177.53 290.52 328.78
EBITDA Margin (%) 25.15% 30.45% 31.01% 31.39%
PBT Margin (%) 3.14% 11.66% 20.21% 21.38%
PAT Margin (%) 5.97% 10.49% 17.82% 19.02%
P/E Ratio (x) 74.76 25.35 15.49 13.69
ROE (%) 10.56% 22.62% 28.56% 26.54%
ROCE (%) 42.44% 72.24% 47.69% 42.41%
Debt Equity Ratio 0.85 0.35 0.28 0.25
EV/EBITDA (x) 19.08 9.01 9.18 8.55
Book Value (Rs.) 570.13 784.71 1017.12 1238.69
P/BV 7.89 5.73 4.42 3.63
Charts
Outlook and Conclusion
� At the current market price of Rs.4500.00, the stock P/E ratio is at 15.49 x FY13E and 13.69 x FY14E
respectively.
� Earning per share (EPS) of the company for the earnings for FY13E and FY14E is seen at Rs.290.52 and
Rs.328.78 respectively.
� Net Sales and PAT of the company are expected to grow at a CAGR of 20% and 76% over 2011 to 2014E
respectively.
� On the basis of EV/EBITDA, the stock trades at 9.18 x for FY13E and 8.55 x for FY14E.
� Price to Book Value of the stock is expected to be at 4.42 x and 3.63 x respectively for FY13E and FY14E.
� We recommend ‘BUY’ in this particular scrip with a target price of Rs.4950.00 for Medium to Long term
investment.
Industry Overview
Cement is one of the core industries which plays a vital role in the growth and development of a nation. The
industry occupies an important place in the Indian economy. Keeping in line with the technological world, the
Indian cement industry has transited itself into a more advanced one. At present, the Indian cement industry is
positioned second globally. This has offered advantages to the industry.
There are 139 large cement plants and over 365 mini cement plants in India, with currently 42 players in the
industry.
With the ever increasing industrial activities, real estate, construction and infrastructure, in addition to the onset
of various Special Economic Zones (SEZs) being developed across the country, there is a huge demand for
cement. The industry is not only meeting the requirements arising within the domestic market but also fulfilling
the burgeoning demands of the international arena. India is also exporting good amount of cement clinker and by
products of cement.
Market Size
The cement industry of India is expected to add 30-40 million tonnes per annum (MTPA) of capacity in 2013. The
industry has a current capacity of 324 MTPA and operates at 75-80 per cent utilisation.
The cement and gypsum products sector has attracted foreign direct investments (FDI) worth US$ 2,625.90
million between April 2000 to November 2012, according to the data published by the Department of Industrial
Policy and Promotion (DIPP).
"It is anticipated that the cement industry players will continue to increase their annual cement output in coming
years and the country's cement production will grow at a compound annual growth rate (CAGR) of around 12 per
cent during 2011-12 - 2013-14 to reach 303 MMT," according to a report titled 'Indian Cement Industry Forecast
to 2012', by research firm RNCOS.
Investments
• Ambuja Cements Ltd plans to invest Rs 2,000 crore (US$ 370.37 million) to enhance its cement capacities in
Rajasthan and northern region. The proposed project at Rajasthan would add five million tonne (MT)
capacity to the total cement production of India. "We are adding new capacities. We are actively pursuing the
five MT capacity expansion in Rajasthan and neighboring northern regions," according to Ajay Kapur, Chief
Executive Officer, Ambuja Cements
• Dalmia Cement plans to invest Rs 1,800 crore (US$ 333.33 million) to increase the company's cement
manufacturing capacity over the next two years. The company also plans to set up a 2.5 million tonne (MT)
greenfield unit in Karnataka
• Germany-based Heidelberg Cement has commissioned Phase-I of its Jhansi grinding unit. The company
currently executing its Rs1,400 crore (US$ 259.36 million) expansion plan through the recent initiative has
escalated the capacity of its unit to 2.7 MT. The company also aims to accelerate the operational capacity at
its Damoh plant in Madhya Pradesh, which will be raised to 6 MT
• France-based Vicat Group is likely to sell 4.5 MT of cement in India in FY 2013, said Mr Gilles du Manoir,
Country-Head (India), Vicat. Apart from the newly-commissioned Rs 1,800 crore (US$ 333.33 million) joint
venture (JV) cement plant, Vicat-Sagar Cement at Chattrasal, Gulbarga district of Karnataka, Vicat owns 51
per cent stake in Bharathi Cement
• Amrit Cement India Ltd (ACIL) has announced the launch of Amrit Cement in North-Eastern market. ACIL
possesses ambitious plan to achieve annual production of 5 MT by 2015-16 through capacity addition in
North-East and adding fresh capacities in Nepal and Bihar for which initiative has already been taken
Government Initiatives
India would require overall cement capacity of around 480 MT. The industry will have to add another 150 MT of
capacity during the period, according to the latest report from the working group on the industry for the 12th
Five Year Plan (2012-17).
Highlights of the Union Budget 2012-13:
Excise duty rationalised for packaged cement, whether manufactured by mini cement plants or others.
Packaged cement, whether manufactured by mini-cement plants or others, attracts differential excise duty
depending on the Retail Sale Price per bag. It is proposed to prescribe a unified rate of 12 per cent + Rs 120 (US$
2.22) PMT for non-mini cement plants and 6 per cent + Rs 120 (US$ 2.22) PMT for mini-cement plants. It is
proposed to charge this duty on the Retail Sale Price less abatement of 30 per cent.
• The Indian construction industry has shown significant development over the years with eminent and
efficient engineers at the helm and is among the best in the world, said Anand Sundaresan, Managing
Director, Schwing Stetter (India) Pvt Ltd, while inaugurating a conference on 'Latest Trends in Construction
Industry'
• The private sector is expected to contribute 44 per cent of the total projected spend of US$ 100 billion on
roads and highways over the Twelfth Five Year Plan (2012-17) period
• The Union Budget 2012- 13 is a pragmatic and growth-oriented one. "Infrastructure sector has been given
due thrust in the budget
Road Ahead
Indian cement majors, including ACC Ltd, Shree Cement Ltd and Ultratech, have signed a co-operation pact to
support low-carbon investments in India. The pact was signed in Geneva with member companies of the World
Business Council (WBC) for Sustainable Development's Cement Sustainability Initiative and International
Finance Corporation (IFC). The roadmap will pave a possible transition path for the Indian cement industry to
reduce its direct emissions by 18 per cent by 2050. This is the first roadmap to focus on one specific industrial
sector in a single country, as per a WBC release.
Disclaimer:
This document prepared by our research analysts does not constitute an offer or solicitation for the purchase or sale
of any financial instrument or as an official confirmation of any transaction. The information contained herein is
from publicly available data or other sources believed to be reliable but do not represent that it is accurate or
complete and it should not be relied on as such. Firstcall India Equity Advisors Pvt. Ltd. or any of it’s affiliates shall
not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the
information contained in this report. This document is provide for assistance only and is not intended to be and must
not alone be taken as the basis for an investment decision.
Firstcall India Equity Research: Email – [email protected]
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