Angel Broking neutral on India Cements

New Delhi : Angel Broking has maintained neutral rating on India Cements (INC), in its June 1, 2011 research report. “India Cements (INC) posted 44.3% yoy growth in net profit to Rs 55cr for 4QFY2011, primarily on account of higher realisations due to the pricing discipline adopted by cement manufacturers in the southern region. However, dispatches fell steeply by ~12.1% yoy because of a decline in demand from the company’s key markets in the south. Andhra Pradesh, the major cement consumer in the south, reported a 17% decline in demand in FY2011 due to continuing political uncertainty in the state.”

“OPM up 437bp yoy: For 4QFY2011, INC posted 27.7% yoy top-line growth to Rs 1,000cr primarily due to the 22.6% yoy improvement in net plant realisations (NPR) to Rs 3,050/tonne. On a sequential basis, the company’s dispatches and NPRs rose by 24.9% and 5%, respectively. On the operating front, the margin increased by 437bp yoy to 18.3% on account of superior realisations. However, input costs were higher on a yoy basis, offsetting the improvement in realisation to a considerable extent. Per tonne power and fuel and freight costs were higher by 9.3% yoy and 12.0% yoy, respectively.”