Orient Cement Ltd
Cement and Cement Products
FV – Re 1; 52wks H/L – 198/128; TTQ – 15000; CMP (May 12, 2016) – Rs 155;

Market Cap – Rs 3167 Crs

Standalone Financials and Valuations for FY16 (Amt in Rs Crs unless specified)

Valuation Parameters

1. EV/EBITDA: 24.25
2. EV/Share: Rs 217
3. EV/Sale: 2.94
4. Market Cap/ Sale: 2.09
5. Debt to Equity: 1.22
6. RoI: 6.1 %

• In September 2015, Orient Cement commissioned its new plant located near Chittapur, District Gulbarga, Karnataka and has an installed capacity of 3 million tonnes per annum (MTPA). The company now has a total capacity of 8 MT including the recently commissioned capacity in Karnataka. The company had invested Rs 2000 Crs in the Karnataka plant.
• It sells 60% of its cement production in Maharashtra and close to 40% in Telangana. Nearly 80% of its sales are in the trade segment with a focus on rural housing.
• Orient Cement has set a target of achieving 15Mt/yr production capacity by the end of 2020. The company is now looking at acquiring a few production plants with 2Mt/yr and 3Mt/yr production capacities in eastern India.

Recent Updates

• The Company’s fourth-quarter net profit fell 77% to Rs 19 Crs from Rs 85 Crs in the same period last year, largely due to a sharp fall in realisation. Overall realisation was down 17%to Rs 3228 per tonne.
• The ramp up of production at the new plant in Karnataka’s Gulbarga district is progressing well and helped achieve a volume growth of 40%.
• The capacity utilisation has touched 44% at new plant, while it was 86% at the old plant. Overall capacity utilisation stood at 74%. The company targets 60% capacity utilisation at new plant for the coming year and 86-88% for the old plants.
• For Q4 of FY 16, the company did a total volume of nearly 13.9 lakhs tonne. The company is targeting sales volume of 14.5-15 lakhs tonnes in coming quarters and also looking at higher usage of pet coke as cement plant stabilise.
• Given the Debt to equity at 1.2, the company is comfortable with it and has no plan to bring it down in current year.
• Remuneration paid to MD and CEO of the company for FY 16has exceeded the limit prescribed under section 197 read with the Schedule V of the Companies Act.
• Aiming for 14.5-15 lakh tonne sales: Orient Cement

Bulk Deals

Block Deals

Overview:

• The company started its operations in 1982 and is engaged in the manufacture and sale of cement.
• The Company’s manufacturing facilities are located at Devapur in Telangana and Jalgaon in Maharashtra.
• The Company’s products include Birla A1 Premium Cement, Birla A1 Premium Cement-OPC 53 Grade and Birla A1 Premium Cement-OPC 43 Grade. The Company’s Greenfield cement plant, located near Chittapur, District Gulbarga, Karnataka, has an installed capacity of approximately three million tons per annum (MTPA).
• The Company is part of the CK Birla Group, which operates in three industry clusters, including technology and automotive, home and building, and healthcare and education.
• The Company operates through a network of over 40 offices.
• Orient Cement operates largely in rural and semi-urban markets in Telangana and Maharashtra. Its target customer is the independent house builder in these markets. Therefore, dependence on the organised real-estate sector is small.

Management:

• Mr C K Birla is the Chairman
• Mr Desh Deepak Khetrapal is the MD and the CEO

Major Non – Promoter Holdings:

Standalone Financial Trends ~ Amt in Rs Crs

• The costs related to the commissioning/stabilisation of the new integrated unit at Chittapur (Karnataka) has affected the firm’s operating and net profit numbers in the last two quarters of FY16.
• Increase in long term borrowing in FY 15 was to finance the new plant at Karnataka.