Angel Broking neutral on Madras Cements, India

Angel Broking has maintained neutral rating on Madras Cements , in its May 24, 2012 research report.

“For 4QFY2012, Madras Cements posted 55.5% YoY growth in its net profit to INR99 crore, which was marginally below our estimates. Net profit growth was aided by 16.8% YoY growth in volumes to 2.13Mt and 13.7% YoY growth in realisation to INR4250/t. However, on a sequential basis, the company’s realisation remained flat. We remain Neutral on the stock.”

Madras registered 32.9% YoY top-line growth to INR912 crore, driven by 32.8% YoY growth in the cement division’s revenue.

“Going ahead, we expect Madras to post an 8.2% and 2.6% CAGR in its top line and bottom line, respectively, over FY2012-14E. At the CMP, the stock is trading at moderate valuations of EV/tonne of US$77 on current capacity (US$53 on FY2014E capacity). However, considering its unfavourable locational presence and risk of margin pressure (if ongoing production discipline in southern India breaks down), we continue to maintain our Neutral recommendation on the stock,” says Angel Broking research report. (Source: Money Control)