By: Abdul Azeem,+92-21-35205520-22 (Ext 8633)Invest capital Markets Limited
Fauji Cement Company Limited (FCCL) is scheduled to announce its financial result for 3QFY14 on 23rd Apr-14. In today’s Value Seeker, we present result preview for 3QFY14, along with outlook and recommendation on the scrip.
Company to post PAT of Rs716mn (EPS Rs0.52) in 3QFY14
FCCL is expected to witness 11%YoY increase in PAT to Rs716mn (EPS Rs0.52) in 3QFY14 as compared to Rs647mn (EPS Rs0.47) during corresponding period last year. Profitability is likely to scale up on the back of i) 22%YoY increase in retention prices resulting net sales to grow by 5.0% to Rs4,258mn ii) a gigantic 33%YoY decline in coal prices to USD76/ton and iii) repayment of loans to reduce financial charges by 7%YoY to 313mn. However, decline in total dispatches by 15%YoY is expected to restrict the profitability of the company.
Similarly, on 9MFY14 basis, the company’s performance is expected to remain healthy. The bottom-line of the company is estimated to grow by a colossal 25%YoY to 1,967mn (EPS Rs1.43) during 9MFY14 as compared to Rs1,569mn (EPS Rs1.14). The rise in profitability is attributed to increase in retention price by 11.5%YoY and decline in financial charges by 15%YoY during the said period.
Outlook and recommendation
Going forward, we believe that along with the private construction demand, the upcoming infrastructure plan of the government would be the major driver of cement demand. The government is planning to build new dams to enhance water storage and to improve electricity generation capacity to overcome current shortage of the same. Moreover, undergoing small houses schemes would also be another positive factor for cement demand going forward. At current levels, we have ‘Hold’ call on the company with Jun14 Target price of Rs18/sh.
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