ICICI Direct recommended hold rating on Mangalam Cement with a target price of Rs 275 in its research report dated May 17, 2018.
ICICI Direct's research report on Mangalam Cement
Mangalam Cement reported weak Q4FY18 results. Revenues increased 18.6% YoY to Rs 304.2 crore (above I-direct estimate of Rs 290.7 crore) mainly led by 13.5% YoY increase in volumes to 0.79 MT (above I-direct estimate of 0.74 MT) and realisation growth of 4.5% YoY to Rs 3,875 (vs. I-direct estimate of Rs 3,928) EBITDA/tonne declined 61.8% YoY to Rs 148/t (below I-direct estimate of Rs 510/t) mainly due to higher power cost (up 80.4% YoY driven by higher pet coke prices) and 35.1% YoY increase in freight cost led by higher diesel prices The company has recommended a dividend of Rs 0.50/share.
Outlook
As a result, we downgrade the stock from BUY to HOLD with a revised target price of Rs 275/share (i.e. at 8x FY20E EV/EBITDA and EV/tonne of US$46).
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