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HDFC Securities
Orient Cement (Buy)
Target: ₹155
CMP: ₹126.75
Orient Cement has reported very strong performance in Q4-FY21, as it ramped up utilisation to 93 per cent (multi-year high) on healthy pricing in its markets. These more than offset the impact of fuel and freight inflation as unitary EBITDA soared to ₹1,095/tonne.
Sales volume recovered strongly in H2, cushioning the total fall to 13 per cent y-o-y (to 5.05 million tonne). NSR grew 10 per cent y-o-y to ₹4,602/tonne as prices remained firm throughout the year, post early price rise in FY21.
As opex remained flat y-o-y, unitary EBITDA grew 65 per cent y-o-y to an all-time high of ₹1,090/tonne. APAT, thus, firmed up 1.5x y-o-y to ₹215 crore on healthy EBITDA and 24 per cent y-o-y decline in finance cost.
The company expects to increase its capacity to 11.5 mt by FY24 (debottleneck of 0.5 mt and 3 mt brownfield at Devapur plant) at Capex of about ₹2,000 crore (including cost for 10MW WHRS plant). Gross/net debt fell to ₹800 crore/₹650 crore in March 21 from ₹1,2.30 crore /₹1,190 crore y-o-y due to a sharp rise in operating cash flows and limited Capex outflow.
We have revised FY22/23 by 15 per cent/12 per cent, factoring in better volumes and lower unitary opex outlook.
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