Mangalam Cement Ltd. share price target

Mangalam Cement Q2FY16 revenue at Rs 2bn (down 16% YoY) was in-line with our expectation while EBITDA at Rs 5mn came below our estimate of Rs 35mn. This was on account of lower than expected operating margin which was impacted by high raw material cost.

yoy; 11% qoq). MGC continues to report dismal volume trends despite an optimistic guidanceconsistentlyoverthepast46quarters. 8 MGCisasmallcapacityof3.25mntnp.a.WefailtounderstandreasonsastowhyMGC...

Mangalam Cement (MCL) delivered a weak performance in 2Q but was marginally above our expectation as operating profit (adjusted for DMF provisioning of Rs45mn and wage board revision of Rs38mn) came in at Rs84mn v/s expectation of Rs56mn. Weak sales volume (down ~14% yoy) and ~3% yoy decline in average realizations marred the operating performance. Given the current market feedback from our dealers check, we do not expect any encouraging scenario in demand in 3QFY16E. Nonetheless, we believe that performance from 4QFY16E is likely to improve due to: 1) likely improvement in pricing environment, 2) healthy volume...

Mangalam Cement (MGC) slipped into operating losses in 1QFY16, primarily due to very weak pricing (Rs 3,303/t, -21.5% YoY, -8.8% QoQ) in its core markets. Expanded capacity continues to drive volumes (0.64 mT, 18.0% YoY, -1.4% QoQ). 1QFY16 is also a representative quarter for operating costs, as we do not expect significant improvements to the cost numbers due to reasons specific to MGC.

Mangalam Cement Q1FY16 revenues (down 7% YoY to Rs 2.1bn) & EBITDA (loss at Rs 41 mn) were below our respective estimates of Rs 2.25bn/5mn. This was on account of lower than expected cement volume (+11% YoY vs. estimate of +15% YoY) and realisations (down 8% QoQ). EBITDA/ton at Rs -68/t (below our estimate of Rs +8/t) fell sharply YoY led by weak realisations which negated the impact of moderation in costs.

Mangalam Cement (MCL) reported a lower than expected operating performance marred by significant deterioration in realizations. A drop of ~12% yoy in average realizations resulted in an operating loss of Rs41mn. Weak operating performance along with higher interest outgo led to a net loss of Rs188mn as against Rs130mn profit seen last year. Nonetheless, we believe that performance in ensuing quarters is likely to improve due to: 1) recovery in realizations (already witnessed an increase of ~Rs25-30/bag in many parts of Northern region from 3rd August 2015 as per our dealers check), 2) sound volume growth along with pickup in utilizations from...

With the capacity expansion by over 60% to 3.25 mt in Q1FY15 (from 2 mt), Mangalam Cement (MCL) is well positioned to leverage the benefits of expected improvement in cement demand in North+Central India. Operating margin is expected to improve going ahead led by improvement in realisations and cost benefits.

other cement manufacturers, MGC has also beaten estimates. However, the difference at MGC, we believe is that the surprise has come in largely on account of operational efficiencies.VolumesatMGCimprovedby14%YoY;10%QoQ.Thoughitcanbearguedthat...

Mangalam Cement (MGC) reported an EBITDA/t of Rs 262 (vs. Rs 116 est.). While volumes improved (0.63 mT, 19.5% YoY, 12.8% QoQ), realizations (Rs 3,753, -8.0% YoY, flat QoQ) were weak. Efficiency gains continued with overall cost/t down ~5% QoQ, led primarily by P&F; cost reduction (down ~11% QoQ per tonne of clinker, helped in part by lower petcoke).