Bottom-line growth was driven by strong 12.8% y o y growth in realization, coupled with a similar 12.7% y o y improvement in volumes.
During 4Q FY 2012, the company changed its method of charging depreciation on captive power plants from straight line to WDV with retrospective effect, which resulted in additional depreciation of Rs.63 cr, of which Rs.39 cr pertaining to previous years was charged as exceptional expenses.
We maintain our Buy rating on the stock. OPM at 21.5%, up 2.91% y o y: During 4Q FY 2012, JKLC registered top-line growth of 26.3% y o y to Rs.527 cr on account of higher volumes and better
realization.
The company’s volumes (including clinker) for the quarter stood at 1.42 mn tonnes, up 12.7% y o y. Realization growth of 12.8% y o y was aided by strong demand in the company’s prime markets. Despite the substantial in crease in raw-material costs, OPM was boosted by a significant 14.5% y o y decline in per tonne power and fuel (P&F) cost. P & F cost declined due to lower pet coke prices, higher use of bio-mass and better energy efficiency.
Outlook and valuation:
Going forward, we expect JKLC to post a healthy 14.5% CAGR in its top line over FY 2012 - 14E, aided by an 11.7 % CAGR in dispatches over the period.
At the CMP, the stock is trading at cheap valuations in terms of replacement cost (EV/tonne of US $ 43 on FY 2014 E capacity), even after considering its presence in unfavorable locations.
Hence, we maintain our Buy recommendation on the stock with a target price of Rs.79. Investment Period 12 Months
Review by Angel Broking
V Srinivasan
022-39357800
v.srinivasan@angelbroking.com
Angel Broking 6th Floor, Ackruti Star Central Road,MIDC, Andheri (E) , Mumbai-93 Main : (91-22) 3935 7600 Extn : 6956 Website : www.angelbroking.com
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