Good operating show; WHRS to aid savings; retaining a Buy Amid the tough business environment, Deccan Cements reported an enhanced operating performance, beating our estimates, aided by price hikes and cost savings, though the volume decline was in line with the industry. On the commencement of the 6MW WHRS, savings in fuel costs are expected to aid its operating performance. The GU expansion is currently on hold. We believe it strong net cash balance sheet and current short term profitability augurs well. We retain our Buy...
Valuation. At the CMP of `652, the stock trades at 22.1x, 18.3x and 15.5x respective FY21e/22e/23e earnings. We retain our Buy recommendation, with a higher price target of `760 (earlier `695), based on 18x FY23e EPS. Risks:...
plant and exports are behind (reasons for a de-rating over the last two years), at ~10x FY22e P/E, we believe in good scope for a re-rating given improving prospects. Its net-cash status and FCF generation ability even in the downturn are other positives. While the near-term outlook is challenging, we are positive...
Outlook, Valuation. With ~98% of the Kutch expansion completed (3.3m tons for clinker, 2m tons for cement), management expects production to commence by Q3 FY21. The Surat GU expansion continues to be deferred. The company has applied for a moratorium on loan repayment. Clinker exports are expected to be poor in the near term. While demand in Maharashtra continues to be weak, pent-up demand and rural demand in Gujarat are expected to provide a boost. We expect volumes to dip 4% in FY21 and grow 39% in FY22 on greater demand and the Kutch GU...
expansion in the East and South, leading to its volumes growing 15% in FY22. Further, we expect net D/E to shrink to 0.4x in FY22 (from 0.6x in FY20) with delevering and greater profitability. We maintain a Buy rating, with a higher target price of `777 (earlier `748), based on 16x FY22e EV/...
Gabon to recover faster. The Gabon operation was closed for only a week `in Apr'20 and is now ramping up well with face veneer supplies to Europe, the Mid-East, and India. Management expects a rise in face-veneer volumes in...
Management positive on trends. Management has expressed greater optimism about US and Europe demand from the agricultural sector, which would be key drivers for FY21. While it expects flat volumes for FY21, we expect 5% volume growth based on our channel checks, assuming no further lockdowns. Also, revenues from carbon black over and above that required for captive purposes would be the catalyst of overall growth. Accordingly, we...
The Zee stock has been an underperformer recently, falling ~40% in the last four months due to cash-flows and balance-sheet concerns. We believe management's focus on cash-flow and cleaning the balance sheet is positive. At the ruling market price, the risk-reward is favourable. We maintain our Buy rating with new target price of `220. Revenues were largely inline, operating profit impacted due to one-offs. The sharp drop in ad revenue pulled down Zee's revenue 3.4% y/y to `19.51bn in Q4FY20. Domestic ad revenue slid 15.1% y/y. On the new tariff...
Earnings to remain muted in FY21. With an expected higher delinquency rate in H2 FY21, credit cost in the medium term is expected to be high. This and the weaker operating performance (attributed to slower business growth) would keep earnings weak in...
Its penchant to deliver better than expected on execution and margins continued even during the Covid-impacted Q4. More inspiring were pruned gross and net debt, implying management continues to strike a fine balance between the income statement and balance sheet. With its sound strategy intact, we see the Covid-disruption as short-lived, and KNR recovering from this largely unscathed (consequently, better placed). It also appears insulated from an expected near-term slowdown in ordering, thanks to the recently added irrigation orders....
