February 15, 2017 / 15:28 IST
Star Ferro & Cement’s (SFCL) consolidated EBITDA dipped 6% YoY hit by demonetisation, though the company moderated the pain through stringent cost control and on lower fuel costs. We expect SFCL’s profitability to recover during FY18/19 aided by its cost controls, stable fuel cost outlook, and cement price recovery in the north east region (NER).
Outlook
The cement manufacturer is also shirking its debtor days, which, coupled with the clearance of subsidy backlogs by the central government can boost its cash-flow, and accelerate deleveraging. SFCL’s reverse-merger into Star Cement (by end of FY17) will simplify its corporate structure without any equity dilution. Maintain BUY with revised TP of Rs 125.
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