IGI Logo

High opex/ton leads to marginal EBITDA miss; risk-reward appears balanced

* Q4FY22 standalone EBITDA declined 20% YoY to Rs3.8bn and blended EBITDA/ton fell 21% YoY to Rs973 − both 4-5% below our and consensus estimates owing to a higher-than-expected increase in cost/ton.

* Nearly 25% of the equipment erection work at the 4mt green-field Panna plant has been completed, and management expects to commission the project by Mar’23. This is likely to drive a grey cement volume CAGR of ~11% over FY22-25E.

* We broadly maintain our FY23-24 EBITDA estimates, with an unchanged TP of Rs2,700 (Mar’23). Our DCF-based TP implies 1-year forward EV/EBITDA of 12x. Maintain Hold as risk-reward appears to be balanced.

* Standalone revenues rose 10% YoY to Rs22bn. Grey cement volume (including clinker) rose ~1% YoY to 3.5mt (In line with our est.), while grey cement realization rose ~2% QoQ (+12% YoY) to Rs4,932 (Emkay est.: Rs4,893). Premium product sales stood at 7% (+100bps QoQ) of trade sales in Q4FY22. White cement plus wall care putty volumes were flat YoY at 0.39mt, with realization up ~5% QoQ to Rs12,156. Other operating income increased by 89% YoY/21% QoQ to Rs453mn in Q4FY22

* Standalone EBITDA declined 20% YoY to Rs3.8bn, 4% below our and consensus estimates. Total cost/ton rose 19% YoY/~2% QoQ to Rs4,797 owing to an increase in input costs. The fuel mix stood at 50% petcoke, 20-25% imported coal and the balance was AFR usage. Management expects cement cost/ton to increase by Rs150/ton QoQ in Q1FY23 owing to an increase in input prices. Adjusted PAT declined 26% YoY to Rs2.2bn. Consolidated EBITDA fell 21% YoY to Rs3.8bn, implying UAE subsidiary’s EBITDA of Rs15mn in Q4FY22 vs. EBITDA of Rs53mn/loss of Rs52mn in Q4FY21/Q3FY22

* Project updates: Capex stood at Rs15.4bn in FY22 (Rs5.7bn in Q4). JKCE expects to commission the 4mt greenfield Panna project by Mar’23. At the Panna project, 25% of the equipment erection work has been done. The Hamirpur grinding unit is progressing ahead of schedule and erection of equipment has started. FY23 capex guidance stands at Rs17bn (earlier Rs14bn) and it is Rs11bn for FY24.

* Concall takeaways: 1) Prices: Cement prices increased by Rs25-35/bag in North and remained flat in South compared to average prices in Q4FY22. 2) UAE operations: JKCE invested ~Rs9.7bn and took an impairment of ~Rs4.5bn so far. It doesn’t have any plans for divestment as it will adversely affect the white cement business in India. 3) Grinding units: JKCE has finalized land for a grinding unit in MP and is likely to finalize land for a UP grinding unit soon. 4) Others: Lead distance increased by 3kms QoQ to 457km. The rail mix stood flat QoQ at 17%. The blending ratio stood at 62% in Q4FY22.

To Read Complete Report & Disclaimer Click Here

For More  Emkay Global Financial Services Ltd Disclaimer http://www.emkayglobal.com/Uploads/disclaimer.pdf & SEBI Registration number is INH000000354

Above views are of the author and not of the website kindly read disclaimer

* FY22 Performance: Total volumes rose 17% YoY to 14mt, while blended EBITDA/ton declined 20% YoY to Rs1,059 in FY22. Consolidated FCF generation stood at negative Rs8.2bn post working capital blockage of Rs4.3bn and capex of Rs15.3bn in FY22. Consolidated net debt increased by Rs9bn YoY to Rs26bn as of Mar’22 post the dividend payment of Rs1.2bn in FY22.

To Read Complete Report & Disclaimer Click Here

For More  Emkay Global Financial Services Ltd Disclaimer http://www.emkayglobal.com/Uploads/disclaimer.pdf & SEBI Registration number is INH000000354

Above views are of the author and not of the website kindly read disclaimer