Recommendation: Buy
CMP = Rs 1855
Price target: Rs2,032
- Madras Cement Ltd’s (MCL) Q3FY2006 net profit at Rs9.54 crore is in line with our expectations. The net sales for the quarter stood at Rs242.6 crore registering a growth of 50.9% year on year (yoy). The growth in the sales was driven by a strong 22% growth in the volumes and a 23.7% growth in the realisation per tonne.
- The company could have performed even better but for water logging in many of its markets consequent to the torrential rains in the southern region, which led to the reduction of dispatches as access to the markets was often curtailed.
- The operating profits stood at Rs41.6 crore, marking a growth of 73.5% mainly on the back of improved operating profit margins (OPMs). The OPMs for the quarter, improved by 220 basis points to 17.1% primarily due to a 13% reduction in the power and fuel cost, as a result of commissioning of the new captive power plant at its Alathiyur plant.
- Helped by a 23% growth in the cement realisations and a 13% reduction in the power and fuel cost MCL’s EBIDTA per tonne grew by 42% to Rs373.
- The depreciation charge during the quarter increased by 24.5% yoy, mainly due to the commissioning of the new captive power plant. Consequently, the net profit for the quarter stood at Rs9.5 crore, registering a staggering growth of 242% yoy.
Recommendation: Buy
CMP = Rs 699
Price target: Rs850
- Maruti Udyog Ltd's (MUL) reported better than expected numbers for Q3FY2006. Income from operations grew by 8% yoy on back of a 7% growth in volumes and a 1.1% improvement in realizations.
- The operating profit margins improved by 258 bps to 15% due to control on costs mainly on the raw material front and other expenditure. 77% reduction in interest cost and 35% lower depreciation lead to the Profit after tax for the quarter growing by 41% to Rs 339 cr.
- At the current market price of Rs 699, the stock is quoting at 15x on its FY2007E earnings per share (EPS) and 9x on EV/EBIDTA basis. I reiterate Buy recommendation on the stock with a revised price target of Rs850.
Recommendation: Buy
CMP = Rs 88
Price target: Rs113
- The net revenues of MRO-TEK grew by 1.3% quarter on quarter (qoq) and by 39.6% year on year (yoy) to Rs36.8 crore in Q3FY2006. The healthy quarterly revenue run rate of over Rs35 crore is much higher than the average of below Rs30 crore reported in the last fiscal.
- The operating profit margin (OPM) was flat at 17.8% on an annual comparison basis but declined by 90 basis points as compared with that in the previous quarter. The sequential decline was largely due to a 15.2% jump in the selling, general & admin (SG&A) expenses.
- On an annual comparison, the 19.3% growth in the profit before tax (PBT) was relatively lower than the revenue growth due to an increase in the interest outgo and depreciation charges during the quarter.
- The net profit, before the extraordinary items and prior year adjustments, stood at Rs4.55 crore, in line with our estimates. However, prior adjustments of Rs0.29 crore boosted the earnings to Rs4.8 crore. On an annual basis, the figures are not comparable due to the one-time write-off of Rs6.5 crore taken in the third quarter of the previous year.
- The company had reported a net loss of Rs0.8 crore in Q3FY2005.
- The company announced its maiden interim dividend of 25% (or Rs1.25 per share) during the quarter. Given the fact that all of its term loans have been repaid and there isn't any requirement for substantial capital expenditure (capex) in the near future, the dividend policy is likely to be more liberal going forward.
- I maintain Buy call on the stock with the one-year price target of Rs113.
