Result Update
November 5, 2015
Star Ferro & Cement (STAFER)
Rating Matrix
Rating
Buy
Target
| 215
Target Period
Potential Upside
12-15 months
64%
Volume growth to drive revenues
Whats Changed?
Target
Changed from |266 to |215
EPS FY16E
Changed from | 6.9 to | 5.8
EPS FY17E
Changed from | 11.9 to | 10.6
Rating
Unchanged
Quarterly Performance
Revenue
EBITDA
EBITDA (%)
PAT
Q2FY16
311.5
55.2
17.7
-7.9
Q2FY15 YoY (%)
262.7
18.6
50.3
9.9
19.1 -140 bps
-21.2
NA
Q1FY16 QoQ (%)
408.7
-23.8
121.3
-54.5
29.7 -1196 bps
41.5
PL
Key Financials
| crore
FY14*
FY15*
Net Sales
1,171.4 1,426.8
EBITDA
254.9
414.9
Net Profit
6.1
63.4
EPS (|)
0.3
2.9
* Previous figures include ferro alloy business
FY16E
1,716.5
516.8
129.7
5.8
FY17E
2,265.4
693.3
235.0
10.6
FY16E
22.4
36.8
6.8
161.6
3.5
17.1
15.7
FY17E
12.4
20.3
4.7
111.9
2.8
26.7
22.7
Valuation Summary
P/E
Target P/E
EV / EBITDA
EV / Tonne
Price/Book value
RoCE
RoNW
FY14
NA
NA
14.7
222.7
4.2
5.2
0.9
FY15
45.8
75.2
8.7
166.3
4.3
11.3
9.4
* Previous figures include ferro alloy business
Stock Data
Market Capitalization
Total Debt (FY15)
| 2910.5 Crore
| 691.8 Crore
Cash and Investments (FY15)
EV
52 week H/L
Equity capital
Face value
MF Holding (%)
FII Holding (%)
| 9.1 Crore
| 3593.1 Crore
185 / 22
| 22.2 Crore
|1
Nil
0.3
Price Performance (%)
Return (%)
Star Cement
Shree Cement
Heidelberg
JK Lakshmi
1M
2.7
3.3
1.2
(2.8)
3M
(14.4)
8.1
5.4
1.7
| 131
6M
(16.0)
20.1
1.6
2.1
12M
100.8
36.0
(17.4)
(1.3)
Research Analysts
Rashesh Shah
[email protected]
Devang Bhatt
[email protected]
ICICI Securities Ltd | Retail Equity Research
Star Ferros consolidated revenues increased 6.6% YoY to | 311.5
crore (below I-direct estimate of | 347.7 crore). However, adjusting
for the ferro business, cement revenues increased 18.6% YoY led by
10.2% YoY increase in volumes to 0.5 MT (in line with I-direct
estimate of 0.5 MT) and 7.6% YoY increase in realisation to | 6,254
(below I-direct estimate of | 6,687 led by | 20/bag decline in east and
| 5/bag decline in North East). The company sold 63% of its volume
in the North East and remaining outside north east
EBITDA margin declined 140 bps YoY to 17.7% (below I-direct
estimate of 24.6%) due to an increase in other expenses (up 42.7%
YoY) and raw material cost (up 47.3% YoY). EBITDA/tonne was flat at
| 1,109/tonne vs. our estimate of | 1,645/tonne
Net loss of | 7.9 crore remained lower than the last year (loss of
| 21.2 crore) due to low depreciation charge and lower tax expenses
Growth momentum to continue led by favourable environment
Improved capacity utilisation backed by the governments thrust on
infrastructure development in the North East region, better pricing power
and limited capacity addition are likely to remain key drivers for growth
over FY15-17E. For SFCL, the adequate capacity is currently in place to
capture the growth opportunity.
Operates at healthy margins vs. its peer set
The company has constantly remained ahead of the industry in terms of
margins in the past two years. The company enjoys an advantage of
geographical complexity and various fiscal benefits under NE industrial
policy (NEIIPP 2007). This includes 100% excise exemption, 100% income
tax exemption, capital investment subsidy up to 30% of the investment in
plant & machinery, interest subsidy at 3% of working capital loan and
transport subsidy to boost investments. The company has also achieved
self-sufficiency in terms of power requirement through setting up a 51
MW power plant. As a result, it generates healthy EBITDA/tonne, which is
over ~2.2x of cement players at pan-India level.
Financial leverage to improve led by strong operating cash flow
After doing major capacity addition during FY12-14, the company plans to
achieve optimum capacity utilisation of over 80% by FY17E. This, in turn,
would help the company to generate an operating cash flow of ~| 600
crore over the next two years, which would be used to fund its major
capex programme. At present, SFCL is adding 1.0 MT of grinding unit in
West Bengal at a capex of only ~| 180 crore and has leased 0.3 MT
grinding unit in Durgapur. Star Ferro is expected to receive | 225 crore of
subsidy in FY16E. Hence, with limited capex plans, Star Ferro is better
placed to reduce its debt significantly over FY15-17E.
Expansion in market share and margins; compelling valuations
The company aims to increase its market share in NER from ~23% to
~30% over the next five to seven years led by aggressive marketing
efforts. Further, we expect its revenues to grow at a CAGR of 26% in the
next two years. In addition, given the companys ability to generate over
2.2x EBITDA/tonne of its peer set and capability to expand through
internal accruals, we believe SFCL is better placed compared to its
competition. Hence, we continue to maintain our BUY rating. However,
the companys key markets are expected to be under pricing pressure in
the near term. Hence, we have revised our target price downwards to
| 215/share (i.e. 8.0x FY17E EV/EBITDA).
Variance analysis
Q2FY16 Q2FY16E
Q2FY15
YoY (%)
Q1FY16
QoQ (%)
Total Operating Income
Other Income
Increase/Decrease in Stock
Raw Material Expenses
Employee Expenses
311.5
1.2
-16.4
62.7
30.5
347.7
1.0
0.0
51.6
23.4
262.7
0.2
20.1
42.5
24.0
18.6
18.6
-181.5
47.3
26.8
408.7
1.7
-24.8
79.7
23.1
-23.8
N.A
-34.0
-21.4
31.8
Other Expenses
EBITDA
179.5
55.2
187.2
85.5
125.8
50.3
42.7
9.9
209.4
121.3
-14.3
-54.5
EBITDA Margin (%)
17.7
24.6
19.1 -140 bps
29.7 -1196 bps
Depreciation
Interest
PBT
Total Tax
Minority Interest
42.8
21.6
-7.9
1.6
-1.6
41.7
20.3
24.5
3.7
6.5
55.3
20.8
-26.6
2.8
-8.3
-22.5
4.1
-70.3
-44.6
-80.4
41.7
20.2
61.1
0.5
19.0
2.6
7.0
-113.0
194.5
-108.5
PAT
-7.9
14.3
-21.2
-62.9
41.5
PL
Volume (MT)
Realisation (|)
0.50
6,254
0.52
6,687
0.45
5,812
10.2
7.6
0.65
6,261
-23.7
-0.1
EBITDA per Tonne (|)
1,109
1,645
1,112
-0.3
1,859
-40.4
Comments
Cement revenues increased 18.6% YoY led by 10.2% YoY growth in volumes
and 7.6% YoY increase in realisation
The increase in other expenses was led by higher coal cost and marketing
expenses
Increase in RM cost and higher other expenses led to lower EBITDA margins
Change in useful life of asset led to a reduction in depreciation. A similar
depreciation charge is expected to continue in the forthcoming quarters
Net loss was lower compared to the previous quarter due to a decline in
depreciation expenses
Key Metrics
Strong demand in the NE and outside NE region led to an increase in volume
growth
EBITDA/tonne was lower than our estimate due to lower-than-expected
realisation and a sharp rise in RM cost
Source: Company, ICICIdirect.com Research
Change in estimates
(| Crore)
Old*
Revenue
EBITDA
FY16E
New
% Change
Old*
FY17E
New
% Change
1,733.3
564.6
1,716.5
516.8
-1.0
-8.5
2,276.5
747.4
2,265.4
693.3
-0.5
-7.2
32.6
152.6
6.9
30.1
129.5
5.8
-247 bps
-15.1
-15.4
32.8
264.6
11.9
30.6
235.0
10.6
-223 bps
-11.2
-11.1
EBITDA Margin (%)
PAT
EPS (|)
Comments
We have revised our revenue estimates marginally
downwards led by pricing pressure in the near term.
Despite pricing pressure, we expect SFCl's revenues to
grow at a CAGR of 26% in FY15-17E
We expect the company to maintain margins of 30%
Source: Company, ICICIdirect.com Research * Previous figures include ferro alloy business
Assumptions
Volume (MT)
Realisation (|)
EBITDA per Tonne (|)
FY13
1.1
6,167
1,106
FY14
1.8
6,697
1,455
FY15
2.4
6,032
1,750
Current
FY16E
2.8
6,251
1,889
FY17E
3.6
6,381
1,953
FY15
2.4
6,032
1,750.0
Earlier
FY16E
2.8
6,303
2,053.0
Comments
FY17E
3.6
6,413
2,105.0
Volume is expected to improve led by capacity expansion
Realisation have been revised marginally downwards
EBITDA/tonne to improve to | 1,953/tonne in FY17E
Source: Company, ICICIdirect.com Research * Earlier figures include ferro alloy business
ICICI Securities Ltd | Retail Equity Research
Page 2
Company Analysis
Dominant player in North-East region
At present, the Star Cement unit is the largest cement unit in the North
East followed by Dalmia Bharat Cement and has a twin advantage of
proximity to raw material and close proximity to the highest price-end
market with ~23% market share. The company enjoys an advantage of
geographical complexity and various fiscal benefits under NE industrial
policy (NEIIPP 2007). This includes 100% excise exemption, 100% income
tax exemption, capital investment subsidy up to 30% of the investment in
plant & machinery, interest subsidy at 3% of working capital loan,
transport subsidy, etc. to boost investments. As a result, it generates
healthy EBITDA/tonne, which is over ~2.2x of cement players at a panIndia level.
Operates at healthy margins vs. its peer set
The company has constantly remained ahead of the industry in terms of
margins in the past two years. This is evident from the fact that SFCL
enjoys the advantage of its own captive limestone mines, which is
situated at a close proximity of large reserves of coal at a distance of only
25 km. The unit uses state-of-the art dry process rotary kiln technology to
manufacture high grade ordinary Portland cement (OPC), Pozzolana
Portland cement (PPC) required for infrastructure projects. The company
has also achieved self sufficiency in terms of power requirement through
setting up a 51 MW power plant.
Exhibit 1: Cement EBITDA/tonne comparison
2.2x
2500
1.5x
2000
1500
1000
1315
1.6x
1867
1349
1130
879
1.9x
693
724
724
500
0
FY12
FY13
FY14
Star Ferro & Cement
All India average
FY15
Source: Company, ICICIdirect.com Research
Focus on strengthening distribution, marketing initiatives, brand image
SFCL has been able to grow sales volume by 35% in FY15. This has also
helped the company to achieve a market share of 23%. Going forward,
the company is planning to increase its market share from 23% to 30% in
the coming years. Apart from strengthening its footprint in the NER
region, the company has also expanded its dealer network in the West
Bengal and Bihar market. A huge marketing and visibility campaign has
been put in place to have better brand visibility and top of the mind recall
among users of cement in all these markets. In addition, the company is
also exploring the possibility of introducing its product in the markets of
neighbouring countries viz. Nepal, Bhutan and Bangladesh.
ICICI Securities Ltd | Retail Equity Research
Page 3
Exhibit 2: Dealer network has grown at robust rate of 38.5% in FY12-9MFY15
1842
2000
1368
1500
1000
803
693
500
0
FY12
FY13
FY14
Dec-14
Dealer network
Source: Company, ICICIdirect.com Research
Financial leverage to improve led by strong operating cash flow
After doing major capacity addition during FY12-14, the company plans to
achieve optimum capacity utilisation of over 80% by FY17E. This, in turn,
would help the company to generate an operating cash flow of ~| 600
crore over the next two years, which, in turn, can be used to fund its
major capex programme, going forward. At present, SFCL is adding 1.0
MT of grinding unit in West Bengal at a capex of only ~| 180 crore and
has leased 0.3 MT grinding unit in Durgapur. The company is also
expected to receive | 225 crore of subsidy in FY16E. Hence, with limited
capex plans, the company is currently better placed to reduce its debt
significantly over the next two years.
Exhibit 3: D/E ratio to improve, going forward
1.5
1.2
1.2
1.0
1.0
0.7
0.4
0.5
0.0
FY13*
FY14*
FY15*
FY16E
FY17E
D/E
Source: Company, ICICIdirect.com Research, *Previous figures include ferro alloy business
ICICI Securities Ltd | Retail Equity Research
Page 4
Expect cement revenue CAGR of 25.9% during FY15-17E
The company has increased its total cement capacity from 1.27 MT in
FY12 to 3.1 MT in FY14. SFCL has also taken three grinding units on hire
with total capacity of 0.76 MT. This leads to a total capacity of ~3.9 MT.
Further, the company is planning to have one own grinding unit of 1.0
MT, which will be expected to be operational by October 2016. Moreover,
SFCL is exploring opportunities in Bangladesh. Given this backdrop, we
expect cement revenues to grow at a CAGR of 25.9% in FY15-17E.
Exhibit 4: Cement revenues to grow at CAGR of 25.9% during FY15-17E
2265
2500
2000
1716
1430
1173
1500
1000
660
500
Exhibit 5: Capacity addition plans (standalone)
Sr no
1
2
3
4
6
5
Cement
Capacity
(MT)
0.62
0.70
1.80
0.46
0.30
1.00
Location
Meghalaya
Meghalaya
Guwhati (Assam)
West Bengal
West Bengal
West Bengal
Capacity at the end of FY17E
0
FY13*
FY 14*
FY 15*
FY 16E
FY 17E
Remarks
Category
Integrated unit
Clinker unit
Grinding unit
Grinding unit
Grinding unit
Grinding unit
Q4FY13
Q4FY13
On lease from Q3FY15
On lease from Q3FY16
FY17E
4.88
Source: Company, ICICIdirect.com Research
Sales (| crore)
Source: Company, ICICIdirect.com Research, * Figures include ferro alloy business
Exhibit 6: Volume to grow led by capacity expansion
3.6
2.8
2.4
1.8
1.1
FY13
FY14
FY15E
FY16E
Sales volume (In MT) - LHS
70.0
60.0
50.0
40.0
30.0
20.0
10.0
0.0
-10.0
318
320
310
310
300
301
291
293
FY13
FY14
290
280
270
FY17E
Growth (%) - RHS
FY15E
FY16E
Realisations (|/50kg bag)
0.50
0.40
0.20
Sales Volume
Source: Company, ICICIdirect.com Research
ICICI Securities Ltd | Retail Equity Research
Q2FY16
Q1FY16
Q4FY15
Q4FY14
Q3FY14
0.00
8000
7000
6000
5000
4000
3000
2000
1000
0
7211
6787
6041
5812
5858
6274
6261
Q1FY16
0.65
Q4FY15
0.81
Q3FY15*
Q3FY15
0.47
0.58
Q2FY15
0.60
0.56
0.45
Q1FY15
0.80
0.53
Q2FY15*
Exhibit 9: realisation at |6,254 during the quarter
Q1FY15
Exhibit 8: Q2FY16 volume at 0.5 MT
Q4FY14*
Source: Company, ICICIdirect.com Research
Q3FY14*
Source: Company, ICICIdirect.com Research
1.00
FY17E
6254
Q2FY16
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
Exhibit 7: Realisation to pick up
Realisation
Source: Company, ICICIdirect.com Research,* Figures include ferro alloy business
Page 5
Margins to improve with better utilisations & fiscal benefits
We expect EBITDA margins at 30.6% in FY17E from 21.7% in FY14 on
account of an improvement in utilisation rates of the expanded capacity of
the North-East plant and a healthy pricing environment.
Exhibit 10: Expect EBITDA/tonne of |1,953 in FY17E
2500
1750
2000
1500
1106
1889
Exhibit 11: EBITDA growth trend
1953
35.0
30.0
25.0
20.0
15.0
10.0
5.0
-
1455
1000
500
FY13*
FY13*
FY 14*
FY 15*
FY 16E
21.7
17.9
30.6
30.1
29.0
FY14*
FY15*
FY16E
FY17E
FY 17E
EBITDA margin (%)
EBITDA/Tonne
Source: Company, ICICIdirect.com Research * Previous figures include ferro alloy
Source: Company, ICICIdirect.com Research * Previous figures include ferro alloy
business
business
Exhibit 12: EBIDA margin at 17.7% in Q2FY16
40.0
35.0
30.0
25.0
20.0
15.0
10.0
5.0
-
29.7
34.7
31.1
30.5
29.0
27.3
19.1
Q2FY16
Q1FY16
Q4FY15
Q3FY15*
Q2FY15*
Q1FY15
Q4FY14*
Q3FY14*
17.7
EBITDA Margin
Source: Company, ICICIdirect.com Research * Previous figures include ferro alloy business
Net profit to grow 3x in next two years due to healthy demand outlook
With a sharp rise in capacity and operating leverage benefits, we expect
net profit to jump 3x over next two years to | 235 crore by FY17E.
ICICI Securities Ltd | Retail Equity Research
Page 6
Exhibit 13: Profitability growth trend
235.0
250.0
| crore
200.0
129.7
150.0
100.0
50.0
63.4
24.9
6.1
FY13*
FY14*
FY15*
FY16E
FY17E
Net profit
Source: Company, ICICIdirect.com Research* Previous figures include ferro alloy business
ICICI Securities Ltd | Retail Equity Research
Page 7
Valuations
A high entry barrier due to geographical complexity and limited resources
for the cement industry in the NER coupled with the new governments
focus towards infrastructure development augur well for Star Ferro. Being
the largest player in the NER, we feel the company will continue to be the
leader as it has already met its major capacity requirements over the next
three to four two years. Better capacity utilisation along with export
opportunities in Bangladesh are expected to lead to revenue growth and
margin expansion, going forward.
We expect SFCL to witness a sharp improvement in capacity utilisation
(through aggressive marketing efforts) and higher cash flow generation.
With this, the debt to equity is expected to come down significantly by
FY17E. We expect the company to report revenue CAGR of 25.9% over
the next two years (FY15-17E).
The company aims to increase its market share in NER from ~23% to
~30% over the next five to seven years led by aggressive marketing
efforts. Further, we expect its revenues to grow at a CAGR of 26% in the
next two years. In addition, given the companys ability to generate over
2.2x EBITDA/tonne of its peer set and capability to expand through
internal accruals, we believe SFCL is better placed compared to its
competition. Hence, we continue to maintain our BUY recommendation.
However, the companys key markets are expected to be witness pricing
pressure in the near term. Hence, we have revised our target price
downwards to | 215/share (i.e. 8.0x FY17E EV/EBITDA).
Exhibit 14: Key assumptions
| per tonne
FY13*
FY14*
FY15*
FY16E
1.1
1.8
2.4
2.8
3.6
Net Realisation*
6167
6697
6032
6251
6381
Total Expenditure
5061
5242
4282
4363
4428
Raw material
1116
1196
954
1109
1003
Changes in Inventory
-227
-44
23
-150
Employee cost
384
448
391
341
296
Other expenses
3788
3642
2914
3062
3130
EBITDA per Tonne
1106
1455
1750
1889
1953
Sales Volume
FY17E
Source: ICICIdirect.com Research, * Previous figures include ferro alloy business
ICICI Securities Ltd | Retail Equity Research
Page 8
Exhibit 15: One year forward EV/EBITDA
18x
15x
12x
10x
8x
4x
Jun-15
Apr-15
Feb-15
Dec-14
Oct-14
Aug-14
Jun-14
Apr-14
Feb-14
Dec-13
Oct-13
10000
9000
8000
7000
6000
5000
4000
3000
2000
1000
0
EV
Source: Company, ICICIdirect.com Research
Exhibit 16: Valuation
FY14*
FY15*
FY16E
FY17E
Sales
(| cr)
1171.4
1426.8
1715.3
2261.2
Growth
(%)
77.9
21.8
20.2
31.8
EPS
(|)
0.3
2.9
5.8
10.6
Growth
PE
(%)
(x)
N.A 476.5
939.5 45.8
104.2 22.4
81.2 12.4
EV/Tonne
($)
222.7
166.3
161.6
111.9
EV/EBITDA
(x)
15
9
7
5
RoNW
(%)
0.9
9.4
15.7
22.7
* Previous figures include ferro alloy business
ICICI Securities Ltd | Retail Equity Research
Page 9
RoCE
(%)
5.2
11.3
17.1
26.7
Company snapshot
250
Target price: | 215
200
150
100
50
Nov-16
May-16
Nov-15
May-15
Nov-14
May-14
Nov-13
Source: Bloomberg, Company, ICICIdirect.com Research
Key events
Date
Mar-05
Event
Commences operations with cement capacity of 0.40 MT and power capacity of 8 MW
Mar-12
Increases clinker capacity from 0.80 MT to 2.60 MT, cement capacity from 1.27 MT to 3.0 MT and power capacity from 8 MW to 51 MW
Apr-15
Oct-15
Completes process of de-merger of ferro alloys division of Star Ferro and Cement (SFCL) into Shyam Century Ferrous Ltd
Hires 0.3 MT grinding unit in West Bengal
Source: Company, ICICIdirect.com Research
Top 10 Shareholders
Rank
1
2
3
4
5
6
7
8
9
10
Shareholding Pattern
Name
Bhajanka (Prem Kumar)
Agarwal (Sanjay)
Bhajanka (Sajjan)
Bhajanka (Santosh)
Agarwal (Divya)
Agarwal (Subham)
Sriram Vanijya Pvt. Ltd.
Agarwal (Brij Bhushan)
Brijdham Merchants Pvt. Ltd.
Sumangal International Pvt. Ltd.
Last filing date % O/S Position (m) Change (m)
30-Sep-15 12.32
27.37
0.00
30-Sep-15 8.77
19.5
0.0
30-Sep-15 7.48
16.6
0.0
30-Sep-15 6.77
15.1
0.0
30-Sep-15 6.52
14.5
0.0
30-Sep-15 4.68
10.4
0.5
30-Sep-15 3.83
8.5
0.0
30-Sep-15 3.76
8.3
0.0
30-Sep-15 3.49
7.7
0.0
30-Sep-15 3.45
7.7
0.0
(in %)
Promoter
FII
DII
Others
Sep-14 Dec-14 Mar-15 Jun-15 Sep-15
66.99 67.00 66.48 66.37 66.37
0.34
0.34
0.11
0.11
0.11
0.00
0.00
0.00
0.02
0.01
32.67 32.66 33.41 33.50 33.52
Source: Reuters, ICICIdirect.com Research
Recent Activity
Buys
Investor Name
Agarwal (Hari Prasad & Others) HUF
Agarwal (Subham)
Agarwal (Girish)
Bhajanka (Nancy)
Bhajanka (Keshav)
Sells
Value
1.06m
0.98m
0.34m
0.17m
0.06m
Shares
1.53m
0.50m
0.20m
0.14m
0.12m
Investor Name
Khemani (Vishnu)
Khemani (Sudha)
Agarwal (Rajesh Kumar)
Subham Capital Pvt. Ltd.
Agarwal (Sanjay)
Value
-2.98m
-1.36m
-0.98m
-0.47m
-0.05m
Shares
-7.49m
-3.42m
-0.68m
-0.50m
-0.03m
Source: Reuters, ICICIdirect.com Research
ICICI Securities Ltd | Retail Equity Research
Page 10
Financial summary
Profit and loss statement
(Year-end March)
Total operating Income
Growth (%)
Raw material cost
Inc/dec in stock
Employees cost
Others
Total Operating Exp.
EBITDA
Growth (%)
Depreciation
Interest
Other Income
PBT
Total Tax
PAT
Growth (%)
Adjusted EPS (|)
| Crore
FY13*
659.6
119.4
-24.3
41.0
405.2
541.3
118.3
50.3
28.6
3.9
43.4
3.7
24.8
1.1
FY14*
1,173.3
77.9
209.6
-7.8
78.9
637.7
918.4
254.9
115.4
161.6
87.2
4.3
10.4
2.7
6.1
-75.3
0.3
FY15*
1,430.3
21.9
226.1
5.4
92.8
691.0
1,015.4
414.9
62.8
225.1
87.7
4.2
106.4
5.0
63.4
939.5
2.9
FY16E
1,716.5
20.0
305.0
-41.2
93.8
842.1
1,199.7
516.8
24.5
212.3
85.2
5.1
224.5
56.6
129.7
104.4
5.8
FY17E
2,265.4
32.0
355.9
0.0
105.0
1111.2
1,572.1
693.3
34.2
196.4
96.0
8.5
409.5
95.2
235.0
81.2
10.6
Cash flow statement
(Year-end March)
Profit after Tax
Add: Depreciation
(Inc)/dec in Current Assets
Inc/(dec) in CL and Provisions
CF from operating activities
(Inc)/dec in Investments
(Inc)/dec in Fixed Assets
Others
CF from investing activities
Issue/(Buy back) of Equity
Inc/(dec) in loan funds
Dividend paid & dividend tax
Inc/(dec) in Sec. premium
Others
CF from financing activities
Net Cash flow
Opening Cash
Closing Cash
Source: Company, ICICIdirect.com Research, * Previous figures include ferro alloy
business
| Crore
FY13*
24.9
50.3
-737.5
201.8
-460.5
-1.5
-1,343.7
337.9
-1,007.3
22.2
856.1
0.0
0.0
-28.6
849.6
-618.2
645.2
FY14*
6.1
161.6
-183.8
260.4
244.3
0.0
-139.5
-7.8
-147.2
0.0
-11.8
-12.2
0.0
-87.5
-111.5
-14.4
27.1
FY15*
63.4
225.1
-178.3
142.3
252.6
0.0
-25.6
87.5
61.9
0.0
-152.5
-26.0
-51.8
-87.7
-318.0
-3.5
12.7
FY16E
129.7
212.3
-32.8
-31.2
278.0
0.0
-154.0
37.2
-116.9
0.0
-100.0
-26.0
51.8
-85.2
-159.4
1.7
9.1
FY17E
235.0
196.4
-290.3
141.4
282.4
0.0
-35.0
75.0
40.0
0.0
-200.0
-26.0
0.0
-96.0
-322.0
0.4
10.9
27.1
12.7
9.1
10.9
11.3
Source: Company, ICICIdirect.com Research, * Previous figures include ferro alloy
business
Balance sheet
(Year-end March)
Liabilities
Equity Capital
Reserve and Surplus
Total Shareholders funds
Total Debt
Deferred Tax Liability
Minority Interest / Others
Total Liabilities
Assets
Gross Block
Less: Acc Depreciation
Net Block
Capital WIP
Total Fixed Assets
Investments
Inventory
Debtors
Loans and Advances
Other Current Assets
Cash
Total Current Assets
Creditors
Provisions
Total Current Liabilities
Net Current Assets
Others Assets
Application of Funds
| Crore
FY13*
FY14*
FY15*
FY16E
FY17E
22.2
670.5
692.7
856.1
84.1
253.8
1,886.6
22.2
664.1
686.3
844.3
77.3
252.9
1,860.7
22.2
649.7
671.9
691.8
94.6
323.1
1,781.3
22.2
805.2
827.4
591.8
94.6
360.3
1,874.0
22.2
1,014.2
1,036.4
391.8
94.6
435.3
1,958.0
1,415.4
251.0
1,164.5
128.9
1,293.4
1.5
150.0
42.7
222.2
322.7
27.1
764.6
72.3
100.9
173.3
591.4
0.0
1,886.3
1,582.4
410.7
1,171.7
99.5
1,271.2
1.5
175.5
109.7
286.8
349.4
12.7
934.0
148.7
197.7
346.4
587.6
0.0
1,860.3
1,666.5
635.8
1,030.7
41.0
1,071.7
1.5
109.1
309.8
680.2
0.4
9.1
1,108.8
77.0
324.0
401.0
707.7
0.0
1,781.0
1,736.5
848.1
888.4
125.0
1,013.4
1.5
123.6
372.4
634.7
1.7
10.9
1,143.3
87.4
197.2
284.7
858.6
0.0
1,873.6
1,796.5
1,044.5
752.1
100.0
852.1
1.5
162.9
491.0
746.2
22.6
11.3
1,434.0
115.2
214.8
330.0
1,104.0
0.0
1,957.6
Source: Company, ICICIdirect.com Research, * Previous figures include ferro alloy
business
ICICI Securities Ltd | Retail Equity Research
Key ratios
(Year-end March)
Per share data (|)
EPS
Cash EPS
BV
DPS
Cash Per Share
Operating Ratios (%)
FY13*
FY14*
FY15*
FY16E
FY17E
1.1
3.4
31.2
0.0
1.2
0.3
7.6
30.9
0.5
0.6
2.9
13.0
30.3
1.0
0.4
5.8
15.4
37.2
1.0
0.5
10.6
19.4
46.6
1.0
0.5
EBITDA Margin
18.0
21.8
29.1
30.1
30.7
PBT / Total Operating income
PAT Margin
Inventory days
Debtor days
Creditor days
Return Ratios (%)
RoE
RoCE
RoIC
Valuation Ratios (x)
P/E
EV / EBITDA
EV / Net Sales
Market Cap / Sales
Price to Book Value
Solvency Ratios
Debt/EBITDA
Debt / Equity
Current Ratio
6.3
3.8
83.3
23.7
40.2
0.6
0.5
54.7
34.2
46.3
7.2
4.4
27.9
79.3
19.7
13.0
7.6
26.3
79.3
18.6
17.9
10.4
26.3
79.3
18.6
3.6
3.8
3.9
0.9
5.2
5.3
9.4
11.3
11.0
15.7
17.1
17.5
22.7
26.7
26.9
116.7
31.6
5.7
4.4
4.2
476.5
14.7
3.2
2.5
4.2
45.8
8.7
2.5
2.0
4.3
22.4
6.8
2.0
1.7
3.5
12.4
4.7
1.5
1.3
2.8
7.2
1.2
4.4
3.3
1.2
2.7
1.7
1.0
2.8
1.1
0.7
4.0
0.6
0.4
4.3
3.5
2.2
2.5
3.6
3.9
Quick Ratio
Source: Company, ICICIdirect.com Research, * Previous figures include ferro alloy
business
Page 11
ICICIdirect.com coverage universe (Cement)
CMP
M Cap
Company
(|)
TP(|) Rating
(| Cr) FY15
1397
1475
Hold
25,367 61.8
ACC*
210
225
Hold
32,235
9.7
Ambuja Cement*
2921
3600
Buy
76,036 73.4
UltraTech Cem
12340 12,500
Hold
43,674 122.5
Shree Cement^
74
81
Buy
1,836
2.6
Heidelberg Cem
84
90
Hold
2,568
1.0
India Cement
652
710
Hold
4,559 22.4
JK Cement
371
373
Hold
4,390
8.1
JK Lakshmi Cem
225
212
Hold
566
8.9
Mangalam Cem
131
215
Buy
2,948
2.9
SFCL
Source: Company, ICICIdirect.com Research
ICICI Securities Ltd | Retail Equity Research
EPS (|)
FY16E FY17E
47.2 69.6
7.7
9.3
103.8 143.4
118.7 240.8
1.4
2.9
5.0
5.7
23.8 41.0
-0.2
7.4
-17.3 17.6
5.8 10.6
EV/EBITDA (x)
FY15 FY16E FY17E
19.0
15.2
11.6
14.2
15.7
13.2
20.3
14.6
11.1
33.2
29.3
20.7
9.7
12.5
9.9
7.8
6.2
5.5
15.1
11.5
9.3
16.9
21.0
15.8
12.2
59.8
8.2
8.8
6.8
4.8
EV/Tonne ($)
FY15 FY16E FY17E
133
119
117
164
146
140
221
188
180
297
247
227
86
87
86
57
54
52
95
92
100
143
102
93
45
46
48
166
162
112
RoCE (%)
FY15 FY16E FY17E
13.7 15.3 18.4
17.8 15.9 17.9
12.1 14.7 18.1
8.3
9.4 14.8
9.2
7.6 10.0
6.8
9.2 10.4
8.5 10.6 12.6
8.3
5.0
8.2
7.2
-0.9 10.4
11.2 17.2 26.8
RoE (%)
FY15 FY16E FY17E
14.1
12.2
14.1
14.4
11.2
12.8
10.6
13.3
15.7
8.8
7.4
13.1
-0.1
3.5
6.8
0.8
4.5
4.6
9.5
9.3
14.0
12.0
0.2
6.6
5.3
-9.7
9.1
9.4
15.7
22.7
Page 12
RATING RATIONALE
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ratings to its stocks according to their notional target price vs. current market price and then categorises them
as Strong Buy, Buy, Hold and Sell. The performance horizon is two years unless specified and the notional
target price is defined as the analysts' valuation for a stock.
Strong Buy: >15%/20% for large caps/midcaps, respectively, with high conviction;
Buy: >10%/15% for large caps/midcaps, respectively;
Hold: Up to +/-10%;
Sell: -10% or more;
Pankaj Pandey
Head Research
[email protected]
ICICIdirect.com Research Desk,
ICICI Securities Limited,
1st Floor, Akruti Trade Centre,
Road No 7, MIDC,
Andheri (East)
Mumbai 400 093
[email protected]ICICI Securities Ltd | Retail Equity Research
Page 13
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ICICI Securities Ltd | Retail Equity Research
Page 14
