Orient Cement Q2 Results Review - Better Than Expected Performance: Axis Securities

Axis Securities Report

Orient Cement Ltd. reported revenue/volume/Ebitda growth of 15%/17%/166%YoY (above expectations) and profit after tax of Rs 25 crore against loss of Rs 9 crore last year on the back of lower operating cost and higher realisation YoY.

Orient Cement recorded an Ebitda Margin of 12% (above expectations) against 5.3%YoY.The quarter’s volume stood at 1.43 million tonnes per annum, up 15% YoY. Orient Cement’s Ebitda/tonne stood at Rs 607 (above expectations), up131% YoY and it reported realisation/tonne of Rs 5,057 against Rs 4,978 up 1.5% YoY.

The company’s cost/tonne declined by 6%/3% YoY/QoQ to Rs 4,449 on the back of lower Power/fuel and inventory adjustment.

Outlook:

The cement demand is expected to remain robust driven by increased capex towards infrastructure and affordable housing and real estate demand in its operating region. We expect company to grow its volume/revenue/Ebitda/adjusted profit after tax at 11%/13%/34%/48% compound annual growth rate over FY23- FY25E.

Valuation and recommendation:

The stock is currently trading at nine times and eight times FY24E/FY25E enterprise /Ebitda higher than its five years average EV/Ebitda multiple of seven times.

We therefore change our rating from 'Buy' to 'Hold' with target price of Rs 215/share implying no upside from current market price.

Key risks to our estimates and target price-

• Lower realisation and demand in its key market. Delay in capacity expansion.

• Higher input costs may impact margins.

Click on the attachment to read the full report:

DISCLAIMER

This report is authored by an external party. BQ Prime does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BQ Prime.

Users have no license to copy, modify, or distribute the content without permission of the Original Owner.