NCL Industries Ltd. share price target

NCL's cement division has room for additional grinding capacity considering the installed clinker capacity. The board plans to set up a 2000-3000 TPD grinding capacity plant in Vizag. The total capex is estimated at | 300 crore of which | 200 crore is likely to be incurred in FY22E. With current total debt being over | 400 crore, we expect debt levels to increase further in FY22E. Further, expansion in the same region (AP, Telangana), which has excessive...

Weak demand drags topline but profitability improves NCL operates in South India (80% cement business comes from AP & Telangana). It has clinker and grinding capacity of 2.6 MT and 2.7 MT, respectively, cement bonded particles boards (capacity of 90000 TPA), hydro power plants with total capacity of 15.75 MW and recently set up a plant to manufacture premium doors with a capacity of 1000 doors/day. While the subdued environment in its major markets is expected to keep growth for FY20E in the negative territory, demand is expected to revive...

ICICI Securities Ltd | Retail Equity Research Andhra Pradesh and Telangana region (accounts for 80% of NCL's sales) have been facing headwinds in terms of pricing. Our channel checks suggest prices in the southern region have fallen 7.3% YoY. In addition, although retail demand is improving, bulk of the demand is coming from infra led spending that is expected to keep prices under pressure. Further, we believe that recent capacity addition by the company will lead to volume push at the cost of pricing. This, coupled with higher input cost, led by an increase in pet...

We are positive on the company given that:-

ICICI Securities Ltd | Retail Equity Research NCL Industries has raised | 201.8 crore via qualified institutional placement by issuing 85 lakh shares at a price of | 237.5 per share. The proceeds of the issue will be primarily used for pre-payment of debt and acquisition of additional limestone mines. The current debt of the company is roughly at | 304.2 crore. The proceeds from the QIP will help the company reduce its debt significantly. We expect debt to reduce by ~| 225 crore leading to a D/E of 0.1x in FY19E. Apart from strengthening the balance sheet, it will also...

ICICI Securities Ltd | Retail Equity Research NCL Industries (NCL) reported a healthy set of Q1FY18 numbers. Revenues increased 17.9% YoY to | 196.6 crore mainly led by 19.7% YoY increase in cement revenues. We believe the increase in cement revenue was mainly due to price improvements in NCL's key markets EBITDA during the quarter increased 59.3% YoY to | 38.5 crore. On the margin front, EBITDA margins increased 509 bps YoY to 19.6% in Q1FY18 mainly led by a decline in freight cost (down 12.2% YoY)...

NCL Industries operated at 75% capacity utilisation during Q3FY17, Government backed spending in the Irrigation and Housing space has been driving cement demand for NCL. The Polavaram Irrigation project is expected to generate demand of 2-3Mtpa of Cement over the next 2-3 Years. The Housing project in Telangana which kick started recently is set to bolster government demand for cement, it is expected to generate demand on the similar lines of Polavaram Irrigation Project. The government of Telangana has issued an order for procurement of cement at ` 230 per...

293.5 mn up 86% y/y mainly due to increase in freight cost. However, staff expenditure stood at `87.8 mn (+10.5% q/q; q; 29% y/y).Depreciation stood at `61.6mn (+3.4% y/y; -4% q/q).Interest...

EBITDA margin stood at 13% (+10 bps q/q;-370 bps y/y). This y/y decline mainly attributed to lower cement realisation during the quarter. Depreciation stood at `64.2mn (+3.5% q/q; +4.3% y/y).Interest expense stood at `81.5 mn (+10.4% q/q; +15.7% y/y). This increase -q/q was mainly due to increase...

NCL has got one of the largest dealer networks, with more than 1100 dealers in Andhra Pradesh. The company covers ~5 North Coastal districts with dealer strength of 550. The strong focus on developing brand/retail market will enable NCL to sustain the volume growth with stability in realization compared...

We recently met the management of NCL Industries (NCL) to understand their outlook on Andhra Pradesh & Telangana's cement demand and insights on the company's future plans. NCL derives over 80% of its revenues from the cement business operating mainly in south India with an installed capacity of 2 MT. The rest of the sales come from segments like cement board particle, ready mix concrete and hydro power. We believe NCL's strong brand franchise, premium positioning in north coastal AP and low cost capacity expansion (0.7 MT at | 180 crore i.e....

NCL Industries Ltd. is the flagship company of the NCL Group, which has been serving the construction industry for the past 28 years with top quality cement, popularly, known as Nagarjuna Cement. The company operates its business through segments, including Cement, Boards, Prefab Structures, Hydel Energy and Ready-Mix Concrete (RMC). It has two cement manufacturing units, one at Simhapuri in Telangana and other at Kondapalli in Andhra Pradesh. It has two plants in Hyderabad and...