Mangalam Cement Ltd. share price target

Presence in strong markets to support growth, going ahead Mangalam Cement has the support of the central region's continued traction of healthy demand and resilience of cement prices in the region to downward pressure. Further increase in prices in the north have also supported realisations during the quarter. Considering a weak first half, due to elections and monsoon, the company expects 7-8% growth in FY20E led by a demand revival in H2FY20E. However, the company faces bottlenecks in the form of its clinker capacity (that the company is trying to work around...

Mangalam Cement has majority of its business in strong markets of the central region. Despite near time hiccups in the form of restricted material movement, labour issues, the industry is expected to register ~8% growth with limited capacity addition. Also, price hikes taken in April should support EBITDA and improve margins despite the volume movement slowdown in Q1FY19E. Further, new initiatives by the recently elected governments in its core markets can further demand. However, the company faces bottlenecks in the form of its clinker capacity (that the company is trying to work around...

Led by better sand availability and uptick in rural demand, cement consumption is expected to increase with an increase in construction activities. In addition, sustained infrastructure spends in low cost housing, roads along with a pick-up in private capex are expected to further boost cement consumption. Further, with limited capacity addition (CAGR of 2% in FY18-20E) and improved demand (CAGR of ~7-8% in FY18-20E) in the northern region, we expect utilisation to further improve in coming years. Since the company sells 95% of its cement production in the north, we...

Mangalam Cement reported a good set of Q2FY19 numbers. Revenues increased 21.3% YoY to | 287.9 crore (above I-direct estimate of | 252.9 crore) mainly led by 21% YoY increase in volumes to 0.73 MT (vs. I-direct estimate of 0.65 MT). Realisations broadly remained flat YoY but remained better than our estimates EBITDA/tonne declined 57.3% YoY to | 193/t due to higher power cost/t (up 63% YoY driven by higher pet coke prices). However, it remained better than our estimates as the company accounted for...

Mangalam Cement (MGC) continued to deliver disappointing performance in 2QFY19 as well with adjusted EBITDA declining by 67% YoY to Rs92mn, while EBITDA/tonne coming in at mere Rs127. While sales volume remained robust at 0.72mnT (+20% YoY and +12% QoQ), steady NSR at Rs3929/tonne (+0.8% YoY and +1.3% QoQ) led to 21% YoY growth in revenue to Rs2.9bn broadly in-line with our estimates. Adjusted for prior period rebate in railway freight, operating cost/tonne surged by 9% YoY to Rs3,775 (-1.7% QoQ) mainly led by increase in Power & Fuel cost. Adjusted net loss stood at ~Rs14mn vs. Rs11mn profit in last year. Looking ahead, we expect higher PPC production, WHRS capacity and recent softening of fuel prices along with likely...

Muted Performance on Plant Shutdown & Cost Pressure Mangalam Cement (MCL) has reported a poor performance in 1QFY19 led by kiln shutdown and elevated cost pressure. Plant shutdown for up-gradation with a view to complying with environment norms led to ~0.15mnT loss in clinker production. Reported EBITDA declined by a steep 88% YoY and 61% QoQ to merely Rs45mn, while EBITDA/tonne came in at Rs70 vs. Rs626 and Rs148 in 4QFY17 and 3QFY18, respectively. Operating cost/tonne jumped by 13% YoY and 3% QoQ to Rs3,841 mainly led by sharp rise in Power & Fuel cost/tonne (+28% YoY and +4% QoQ) and RM cost/tonne (+30% YoY and +12% QoQ). Average realisation stood at Rs3,910/...

Mangalam Cement reported a weak set of Q1FY19 numbers. Revenues increased a mere 0.6% YoY to | 254.2 crore (below I-direct estimate of | 269.1 crore) mainly led by 3.2% YoY increase in volumes to 0.65 MT (vs. I-direct estimate of 0.7 MT) while realisation declined 2.5% YoY to | 3,910 (vs I-direct estimate of | 3,844) EBITDA/tonne declined 88.8% YoY to | 70/t (below I-direct estimate...

ICICI Securities Ltd | Retail Equity Research Mangalam Cement reported weak Q4FY18 results. Revenues increased 18.6% YoY to | 304.2 crore (above I-direct estimate of | 290.7 crore) mainly led by 13.5% YoY increase in volumes to 0.79 MT (above I-direct estimate of 0.74 MT) and realisation growth of 4.5% YoY to | 3,875 (vs. I-direct estimate of | 3,928) EBITDA/tonne declined 61.8% YoY to | 148/t (below I-direct estimate of | 510/t) mainly due to higher power cost (up 80.4% YoY driven by...

Mangalam Cement (MCL) has reported a poor operating performance in 4QFY18 led by elevated cost pressure. Its reported EBITDA declined by a steep 53% YoY (+43% QoQ) to just Rs117mn, while EBITDA/tonne stood at a meagre Rs148 vs. Rs357 and Rs110 in 4QFY17 and 3QFY18, respectively. Operating cost/tonne witnessed surged by 13% YoY to Rs3,727 mainly led by sharp rise in Power & Fuel cost/tonne (+59% YoY and +8% QoQ) and Logistics & Sales Distribution cost/tonne (+19% YoY and +4% QoQ). Average realisation rose by 6% YoY (-2% QoQ), to Rs3,875/tonne, while sales volume grew by 13% YoY and 6% QoQ to 0.79mnT. Looking ahead, we believe that likely utilisation ramp-up at Aligarh SGU, higher PPC production and...

Mangalam Cement reported a weak set of Q3FY18 numbers. Revenues increased 24.9% YoY to | 292.0 crore (above I-direct estimate: | 260.7 crore) mainly led by 14.4% YoY increase in volumes to 0.74 MT (above I-direct estimate: 0.66 MT) and realisation growth of 9.2% YoY to | 3,951 (vs. I-direct estimate: | 3,950) EBITDA/tonne declined 66.6% YoY to | 110/t (vs. I-direct estimate: | 442/t) mainly due to higher raw material cost (up 105.7% YoY driven by higher clinker production and higher inventory of coal) and...

Mangalam Cement's Q2FY18 results were above our estimates. Revenues increased 25.3% YoY to | 237.3 crore (above I-direct estimate of | 198.2 crore) mainly led by 24.5% YoY increase in volumes to 0.60 MT (above I-direct estimate of 0.51 MT) while realisation was flat at | 3,929 (vs I-direct estimate of | 3,887) EBITDA margin increased 22 bps YoY (down 397 bps QoQ) to 11.5% (vs. I-direct estimate of 11.5%) in Q2FY18 mainly led by a decline in other expenses (down 2.5% YoY). EBITDA/tonne increased 2.6%...

Aided by strong demand environment with production shutdown by Binani Cement in Northern region and utilisation ramp up in Aligarh GU, MCL's sales volume grew by a robust 23% YoY to 0.6mnT. Utilisation for Aligarh GU stood at 45%, which the Management expects to take...

Mangalam Cement (MCL) has reported a strong operating performance in 1QFY18 amid cost pressures, as operating profit came in at Rs405mn (-16% YoY and +64% QoQ), which is higher than our estimate of Rs311mn. Better-than-expected improvement in realisations (+9% YoY and +11% QoQ) was the sole reason for robust operating performance. However, operating cost/ tonne rose by ~17% YoY and 3% QoQ to Rs3,417 mainly owing to significant jump in Power & Fuel cost (due to high petcoke price) and freight costs (led by loading restrictions). EBITDA/tonne stood at Rs648 in 1QFY18 vs. Rs795 and Rs357 in 1QFY17 and 4QFY17, respectively. MCL's sales volume grew by 3.3% YoY to 0.63mnT mainly supported by increased volume from Aligarh...

ICICI Securities Ltd | Retail Equity Research Mangalam Cement's Q4FY17 results were above our expectations. Revenues increased 21.0% YoY to | 254.3 crore (above I-direct estimate: | 220.5 crore) led by 14.7% YoY increase in volumes to 0.69 MT (vs. I-direct estimate of 0.62 MT) mainly led by 0.75 MT capacity expansion at Aligarh, UP. Realisation improved 5.5% YoY to | 3,677 (vs. I-direct estimate of | 3,557) EBITDA margin declined from 14.1% to 9.7% in Q4FY17 (above Idirect estimate of 8.2%) mainly led by a rise in power & fuel cost (up...

ICICI Securities Ltd | Retail Equity Research Mangalam Cement's Q3FY17 results were above our estimates. Revenues increased 10.2% YoY to | 233.0 crore (above I-direct estimate: | 200.4 crore) led by 9.3% YoY increase in volumes to 0.65 MT (vs. I-direct estimate: 0.55 MT) mainly led by 0.75 MT capacity expansion at Aligarh, UP. Realisation improved 0.8% YoY to | 3,607 (vs. I-direct estimate of | 3,670) EBITDA margin increased from 4.4% to 8.8% in Q3FY17 (above Idirect estimate of 4.2%) mainly led by a decline in raw material...

ICICI Securities Ltd | Retail Equity Research Mangalam Cement's Q2FY17 results were below our expectations. The topline miss led to lower-than-expected EBITDA and PAT. Revenues declined 5.2% YoY to | 189.5 crore (below I-direct estimate: | 207.4 crore) led by 13.6% YoY decline in volumes to 0.48 MT (vs. I-direct estimate of 0.55 MT) mainly due to heavy rainfall. However, realisation improved 9.7% YoY to | 3,980 (vs. I-direct estimate of | 3,753) mainly due to better pricing scenario in north...

Q2FY17 Revenues/EBITDA at Rs 1.89 bn/Rs 224mn were below our respective estimates of Rs 2.19bn/Rs 430mn on account of lower volumes and higher costs. EBITDA/t improved to Rs 438/t (from -Rs 18/t in Q2FY16) led by lower costs on YoY basis. H1FY17 volume is down by 4% YoY due to muted demand. However, we expect volumes in 2HFY17 to pick-up led by demand pick-up and ramp-up of Aligarh plant. We increase our FY17E EBITDA estimates by 27% to factor in better realisation & lower fixed costs. Operational performance is expected to improve significantly during FY17-18E led by increase in volumes & margin expansion. FY18E EBITDA is expected to be at Rs 1.78bn (5x of FY16 EBITDA) implying to 124% CAGR. We upgrade Mangalam to Buy as valuation appears attractive.

Mangalam Cement's (MCL) reported operating performance has come in below our estimate as EBITDA stood at Rs224mn vs. our estimate of Rs245mn mainly due to significant spike in power and fuel cost/tonne (+41% yoy & +39% qoq) led by a sharp surge in petcoke prices, which rose to Rs7,800/tonne from Rs6,500/tonne in 1QFY17. Notably, operating cost/tonne dipped by ~7% yoy (led by no purchase of stock in trade) and surged by ~16% qoq due to higher fuel cost. EBITDA/tonne came in at Rs453 in 2QFY17 from Rs134 in 2QFY16. However, its sales volume remained tepid (-10.5% yoy & -18.5% qoq at 0.49mnT) owing to seasonal overhangs and logistics...

Mangalam Cement Profit after tax has turned positive from last two quarter, the company has registered a growth of 6.66% in its quarterly sales from Rs. 210.23 crs in Q4 FY16 to Rs. 225.17 crs in Q1 FY17. The company has lowered down its total expenditure by 16.97% YoY from Rs. 224.18 crs in FY16 Q1 to Rs. 186.12 crs in FY17 Q1.Company’s operating Profit showed jump of 57.01% in QoQ with operating profit margin of 17%. Net Profit margin stands at 10.08%, and Net profit jumped by 60.25% QoQ. Company has zero down its promoter pledge from 51.86% in FY16 Q3.

Mangalam Cement started commercial production in March 1981 with an installed capacity of 4 lakh tonne per annum of Cement. The Company then took up two further expansion scheme envisaging increases in the installed capacity from 4 tonne per annum to 20 lakh tonne per annum in between 1994 to 2005. The Company has recently expanded its capacity from 2.0 MTPA to 3.25 MTPA upgrading its Kiln I capacity by 0.5 MTPA in 2013 and establishing a New Cement Mill of 1.25 MTPA in 2014. They recommend BUY in Mangalam Cement @ 350 with the target of 395.