May 10, 2013, 10.33 AM | Source: Moneycontrol.com
Dolat Capital is bullish on Kajaria Ceramics (KCL) and has recommended buy rating on the stock with a target of Rs 272 in its April 30, 2013 research report.
, Dolat Capital |
"KCL has reported net revenues at Rs 4.49bn (Dolat Est. Rs 4.55bn), growth of 20.5 percent YoY as compared to Rs 3.73bn registered in the corresponding quarter of the previous year. We believe that the revenue growth is largely attributed to volume growth while increase in realization due to change in product mix would also have aided the company. For the full year, KCL reported 22.8 percent rise in net turnover at Rs 16.1bn.
KCL’s operating margins were impacted by 60 bps YoY largely due to a) increase in power & fuel costs by 360 bps (~50 percent increase in power & fuel costs YoY) & b) increase in other expenditure and employee costs. However lower input costs helped restrict the sharper fall in EBIDTA margins. Sequentially though, the margins recovered 60 bps from 14.5 percent to 15.1 percent mainly due to softening of power and fuel costs by 180 bps. For the full year, KCL reported EBIDTA margins of 15.2 percent, a fall of 50 bps as compared to last year.
PAT for the quarter under review grew by robust 31 percent to Rs 308mn as compared to Rs 235mn YoY on consolidated basis led by lower interest costs which fell 23 percent YoY to Rs 102mn. Net margins thus gained 60 bps YoY to 6.9 percent. For the full year, PAT grew by 29 percent to Rs 1.05bn.
We expect the company to report revenues & PAT CAGR of 18 percent & 26 percent over the next two years (FY13-15) with ROE expected to remain strong at 30 percent. However we expect the margins to soften from 15.2 percent in FY13 to 14.9 percent in FY15E. At CMP of Rs 208, the stock trades at 11.3x & 9.2x its FY14E & FY15E earnings of Rs 18.4 & Rs 22.7 respectively. We maintain our BUY rating and TP of Rs 272 (12x FY15E earnings), an upside potential of 31 percent from the current levels," says Dolat Capital research report.
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