Angel Broking neutral on Mangalam Cement

Angel Broking's report on Mangalam Cement

For 1QFY2016, Mangalam Cement (MCL) reported a disappointing set of numbers on the profitability front; its top-line declined by 7.3% yoy to `213.4cr, marginally below our estimate of `217.8cr. Volume growth, at 11.9% yoy to 0.6mt, was above our estimate of 0.56mt. However MCL reported an operating loss of `2.1cr as against our estimated profit of `7.8cr. It was mainly due to a higher than expected fall in realization and higher operating expenses. Consequently, the net loss widened to `18.8cr and was higher than our estimated loss of `7.3cr. The same is mainly due to higher depreciation and interest expenses on account of new capacity addition.

Outlook and Valuation: Going ahead, we expect sales volume to remain strong and grow at 18.3% CAGR during FY2015-17. Realization is expected to grow at a CAGR of 3.7% during FY2015-17. This would lead to top-line CAGR of 20.8% during FY2015-17. However we remain conservative on the margins front as low cement realization in its key region along with higher operating costs would put pressure on margins in near term. We have a Neutral rating on the stock, says Angel Broking research report.

For all recommendations, click here 

Read More