India Cements Q4FY2008 revenues (excluding Vishaka Cement) grew by 46.6% y-o-y to Rs844 crore. The OPM declined by 190 basis points y-o-y to 31.2%.
Consequently, the operating profit reported a growth of 38% to Rs262.9 crore. The adjusted net profit declined by 5.9% to Rs131.5 crore.
For FY2008, the standalone net sales stood at Rs3,044.3 crore, up 35% y-o-y. The OPM improved by 290 basis points y-o-y to 35.5%. The adjusted profit after tax (PAT) stood at Rs664.6 crore, up 40.6% y-o-y.
The road ahead
Going ahead, we expect the earning growth to come under pressure due to a surge in the input cost and an increase in the effective tax rate. To factor in higher input cost we have revised our FY09 net profit estimates downward by 6%.
We expect the company to post Earnings Per Share (EPS) of Rs25.7 and Rs25.6 in FY2009 and FY2010 respectively. At the current market price of Rs120, the share trades at 4.7X and 4.7X its FY2009 and FY2010 earnings and an enterprise value (EV)/EBIDTA of 3.6X and 3.5X for FY2009 and FY2010 respectively.
We maintain BUY recommendation on the stock with a revised price target of Rs260.