SRCM’s Standalone EBITDA at Rs 9.9 bn (+17% y-o-y, +41% q-o-q) got here in 10%/ 20% above our forecast/ Bloomberg consensus estimate, pushed by greater quantity (+14% y-o-y vs our estimate of +12% y-o-y) and 1% greater blended realisations at Rs 231/bag (vs estimate of Rs 229/bag). Overall per unit prices at Rs 3,114 (-9% y-o-y, -6% q-o-q) have been additionally 2% under estimates. With greater realisation and decrease opex, blended Ebitda at Rs 1,513/t (+3% y-o-y, +6% q-q) was 8% above estimate of Rs 1,403/t.
Rural and semi city housing demand stays robust whereas infra demand has picked up. We count on demand recovery to speed up additional put up festive interval. We enhance our FY21F/22F/23F cement quantity assumptions by 14%/11%/8% and now assume 3% y-y progress in FY21F, adopted by 17%/12% y-y progress in FY22-23F. We count on greater realisations to offset value inflation and document-excessive Ebitda margins to maintain.
New capacities to drive above trade progress
SRCM has been gaining market share pushed by ramp-up of newer capacities. Compared to ~6-12% y-o-y decline for giant cap friends over previous 12 months, SRCM’s volumes have been up 1% y-o-y regardless of COVID-19 lockdowns. Now, with the commissioning of latest 6mt capability by Dec-20, we count on additional market share features for SRCM.
Recently introduced clinker line-3 at Raipur ought to present additional headroom for progress in quick-rising East India. Further, administration highlighted plans to extend grinding capability from ~40mt to ~57mt over subsequent three years and subsequently to ~80mt over the subsequent 6-7 years.
Raise Ebitda/earnings and goal worth to Rs 27,500; improve to Buy
Driven by greater cement volumes and decrease prices, we increase our FY21F/22F/23F core Ebitda by 16%/ 12%/9%, whereas earnings enhance by sharp 36% in FY21F as a consequence of decrease depreciation and by 13-15% for FY22-23F. We now count on 35% y-o-y EPS progress in FY21F adopted by 20%/26% y-o-y progress in FY22-23F, for a 27% FY20-23F EPS CAGR. With above-trade progress charges and profitability, we now worth SRCM on 17x Dec-22F EV/Ebitda (earlier 16x Sep-22F EV/Ebitda).
Driven by our Ebitda/a number of will increase and roll-ahead of valuations, we increase our TP to Rs 27,500 (from Rs 22,000), implying 17% upside. With an improved outlook and up to date underperformance vs friends, we improve SRCM to Buy (from Neutral). The stock at the moment trades at 17.6x FY22F EV/Ebitda.