DECCAN CEMENTS LTD - Quantamental Equity Research

Quantamental Equity Research on DECCAN CEMENTS LTD | Release: 08 Jan 2019 10:32:08 UTC+05:30 | Reporting Currency: INR | Trading Currency: INR | Exchange:NSE/BSE NSE CODE:DECCANCE and BSE CODE:502137
Last Close:  INR 399.9
Fair Value:  INR 655.3
Est. Price by Mar 19:  INR 684.4
Market Capitalization (INR Crs):  560.16
Industry:  Cement & Cement Products
Rating:  STRONG BUY
Upside:  71%
Company Profile
Deccan Cements is engaged in the manufacturing of cement (2.3 MTPA) in the form of clinker; manufacturing of Portland cement, slag cement and related products, and generation of electricity.
Growth Per Share
Particulars 1-Year 3-Year 5-Year  
Revenue % 15% 2% -3%  
EBIT % -18% 39% 55%  
Earnings % -18% 94% 427%  
Book Value %  10% 49% 62%  
Stock Total Return %  -12% 175% 418%  
Share holding pattern
Particulars %age   
(A) Promoter & Promoter Group 56.19  
(B) FII/FPI 1.41  
(C) DII/Insurance Companies 14.22  
(D) Public holding < 2 lakhs of cap. 14.08  
(E) Others 14.10  
Grand Total 100.00  
Fundamentals (Historical and Estimated)
Particulars Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18  Mar-19 E   Mar-20 E   Mar-21 E   Mar-22 E   Mar-23 E   
Price 95 76 88 99 86 187 328 588 515 684 794 922 1063 1183  
Return on Equity 3% 1% 22% 3% 2% 8% 16% 14% 11% 11% 11% 12% 12% 12%  
Price to Earning  30.7 53.2 2.6 19.0 24.0 13.2 10.1 17.6 18.7 21.5 21.5 21.5 21.5 21.5  
EVTI 1.6 1.1 0.6 0.7 0.8 1.0 0.9 1.8 1.3 1.5 1.5 1.5 1.5 1.5  
EVTIFM 30.7 53.2 2.6 19.0 24.0 13.2 10.1 17.6 18.7 21.5 21.5 21.5 21.5 21.5  
Price to Book Value 0.8 0.6 0.6 0.6 0.5 1.1 1.6 2.5 2.0 2.4 2.5 2.6 2.6 2.6  
Debt to Equity  1.9 1.8 1.2 1.1 1.0 0.8 0.3 0.2 0.1 0.1 0.1 0.0 0.0 0.0  
Dividend Yield 2% 1% 2% 1% 1% 1% 1% 1% 1% 0% 0% 0% 0% 0%  
Cash Flow to Firm 19% 29% 33% 26% 15% 26% 54% 9% 9% 3% 4% 6% 10% 10%  
Detailed Estimates
Title Mar-18 Mar-19 E Mar-20 E Mar-21 E Mar-22 E Mar-23 E  
Sales          570.25          680.13          786.91          882.40          957.99       1,005.89  
EBITDA            89.37          100.33          116.08          130.17          141.32          148.39  
EBIT            66.68            73.27            85.80            97.36          106.95          116.55  
PBT            60.84            67.43            78.27            90.83          104.72          116.55  
NPAT            38.55            44.52            51.68            59.97            69.15            76.95  
Price to Earning             18.71            21.53            21.53            21.53            21.53            21.53  
Price to Book Value              1.97              2.36              2.46              2.55              2.62              2.60  
Debt to Equity               0.10              0.12              0.09              0.03                 -                   -    
Return on Equity              0.11              0.11              0.11              0.12              0.12              0.12  
Enterprise Value to Total Income (EVTI)              1.32              1.47              1.46              1.47              1.46              1.46  
Enterprise Value to Total Income to Firm Margin(EVTIFM)            19.54            22.58            22.11            22.05            21.71            20.91  
Price or Est. Share Prices          514.83          684.40          794.40          921.95       1,063.00       1,183.05  
DISCOUNTED CASH FLOW
Title Mar-19 E Mar-20 E Mar-21 E Mar-22 E Mar-23 E  
PBT            67.43            78.27            90.83          104.72          116.55  
Interest              5.84              7.54              6.53              2.23                 -    
Depreciation            27.06            30.28            32.81            34.37            31.84  
Cash Flow Before Tax          100.33          116.08          130.17          141.32          148.39  
Tax Rate            33.99            33.99            33.99            33.99            33.99  
Cash Flow After Tax            66.23            76.63            85.93            93.29            97.95  
Terminal Cash Flow                                                                                    -         1,309.01  
Total Cash Flow            66.23            76.63            85.93            93.29       1,406.96  
Present Value of Cash Flow          917.90  
Debt                 -    
Value of Equity          917.90  
Fair Value Per Share          655.30  
Equity               560
Debt                 36
Beta Take from Reuters 1.12
Risk Free Rate Prevailing Yield in India 7%
Market Risk Premium Assuming 8.82% premium for Equity Investments 7%
Interest Paid                   6
Tax Benefit                   2
Interest Net of Tax                   4
Debt                 36
Cost of Debt 10%
Cost of Equity 16%
Debt Weight 6%
Equity Weight 94%
WACC 15%
Cash Flow of Mar-23 E            97.95
Growth 7.6%
Present Value of Terminal Cashflow       1,309.01
Peer Comparision
# Name CMP Rs. Mar Cap Rs.Cr.  B.V. Rs. Annualized ROE % ROCE % Latest EVTI Latest EVTIFM CMP / BV P/E Debt / Eq Div Yld % Growth Rate R % SGR % Ann Total Income Unpledged Prom Hold % PQEIOI QoQ Sales % Qtr Sales Var % QoQ Profits % Qtr Profit Var % Graham's Number Rs.
   1  The Ramco Cement           628.60          14,808          178.12            14.02            16.39              3.29            33.10              3.53            31.45              0.28              0.48            12.24            11.71            4,758            41.91               136            -2.98            10.98            -8.41          -32.07          283.11
   2  India Cements             91.50            2,833          167.90              0.14              5.63              0.96            14.37              0.54            38.83              0.60              0.87              0.10              0.10            5,563            18.09          -1,201              1.94              9.37          -93.20          -93.96            98.53
   3  K C P             91.25            1,176            37.46            22.32            17.81              1.35            31.29              2.44            20.09              1.03              1.10            18.78            17.18            1,188            41.80               189              1.23            12.88            89.41          -44.42            58.64
   4  Deccan Cements           399.90               560          272.59            13.95            16.70              0.79            13.82              1.47            14.30              0.10              0.75            12.43              9.90               658            56.19                 67              0.49            19.32          -10.31              7.05          414.18
   5  NCL Inds.           136.30               617          103.53              8.27            15.90              0.95            13.15              1.32            16.66              0.60              1.83              6.37              5.79               920            20.82                 96            -4.43            21.39            24.39          -20.78          140.80
   6  Anjani Portland           126.25               319            90.10              7.06            15.77              0.82            26.76              1.40            17.03              0.16              1.58              5.54              4.26               421            75.00               110              2.53            15.21          -46.27          -51.57          122.65

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