cccl result updated

7/31/2019 CCCL Result Updated

1/12

Please refer to important disclosures at the end of this report 1

Operating profit 56 22 20 148.3 172.5

Source: Company, Angel Research

CCCL posted a mixed set of numbers for the quarter. The companys revenue

came in-line with our expectations, but the company gave a positive surprise at

the EBITDA level, which led to higher-than-expected profit for the quarter. CCCL

had an order inflow of `403cr during the quarter, taking the order inflow for

FY2012 to`3,114cr. The order book currently stands at `5,916cr (2.8x FY2012

revenue).

The companys top line declined by 8.4%

yoy to `589cr, against our estimate of `572cr. Segment wise, the commercial

segment has contributed 54% to the companys revenue, followed by the

infrastructure (23%), industrial (19%) and the balance by residential and building

products segments. However, the positive surprise came on the margin front, as

the company posted significantly higher-than-expected EBITDA margin of 9.5%,

a jump of 600bp/490bp on a yoy/qoq basis, against our expectation of 4.4%.

The main reason for margin improvement was lower cost of material and

subcontracting charges as a percentage of sales. Interest cost came in at`29cr,

a jump of 142.8%/59.4% on a yoy/qoq basis. On the bottom-line front, the

company posted profit of `25cr in 4QFY2012 vs. `2cr in 4QFY2011, against

our expectation of`1cr profit mainly on account of margin improvement.

CCCL has been posting erratic numbers on the EBITDAM

front and consequently has been performing poorly on the earnings front as well

since the past few quarters. Slow-moving orders (`1,622cr, 27% of order book)

and poor EBITDAM performance expected for another 3-4 quarters would result

in subdued performance from CCCL going forward as well.Further, high interest

cost would result in earnings pressure in the near future.

% chg 7.3 11.3 2.7 17.2

% chg 26.6 (48.8) - -

EBITDA margin (%) 9.1 7.0 3.3 5.9

P/E (x) 3.8 7.3 - 7.9

RoAE (%) 16.6 7.7 (4.6) 7.2

RoACE (%) 19.3 13.2 4.9 10.7P/BV (x) 0.6 0.5 0.6 0.6

EV/Sales (x) 0.3 0.3 0.4 0.4

EV/EBITDA (x) 2.9 4.5 11.3 6.0


CMP `15

Target Price -

Investment Period -

Stock Info

Sector

Bloomberg Code

Shareholding Pattern (%)

Promoters 50.8

MF / Banks / Indian Fls 20.6

FII / NRIs / OCBs 13.7

Indian Public / Others 15.0

Abs. (%) 3m 1yr 3yr

Sensex (10.3) (11.9) 34.1

CCCL (18.0) (57.2) (47.9)

2

16,3284,843

CCON.BO

CCCL@IN

274

0.6

38/14

25,060

Infrastructure

Avg. Daily Volume

Market Cap (`cr)

Beta

52 Week High / Low

Face Value (`)

BSE SensexNifty

Reuters Code

022-39357800 Ext: 6842

[email protected]

Performance Highlights

4QFY2012 Result Update | Infrastructure

May 15, 2012


2/12

CCCL | 4QFY2012 Result Update

May 15, 2012 2

Exhibit 1:Quarterly performance (Standalone)

Total expenditure 533 620 426 (14.1) 25.1 1970 1986 (0.8)

OPM (%) 9.5 3.5 4.6 600bp 490bp 5.2 7.1 (190)bp

Interest 29 12 18 142.8 59.4 80 47 69.5

Depreciation 4 3 4 11.9 4.5 14 13 12.6

Non operating income 3 1 3 205.8 7.7 8 5 55.6

Nonrecurring items - 0 0 - - 0 1 -

Tax (1) 3 3 (124.8) (130.1) 10 34 (69.9)

Share of pfts to JV partner 1 3 1 (64) 110 8 12 (37)

PAT (%) 4.3 0.2 (0.7) - - 0.2 2.4 -


Exhibit 2:4QFY2012 Actual vs. estimates

Net sales 589 572 2.9

EBITDA 56 25 121.5

Interest 29 19 51.8Tax (1) 1 (172.9)

PAT 25 1 -


Revenue declines on account of marred execution pace

The companys top line declined by 8.4% yoy to `589cr, against our estimate of

`572cr. Segment wise, the commercial segment has contributed 54% to the

companys revenue, followed by the infrastructure (23%), industrial (19%) and the

balance by residential and building products segments. As per management, the

overall scenario for infrastructure companies remains murky as: 1) increasedcompetition levels in bagging orders is still affecting the industrys margins;

2) recent increases in steel and cement prices are a cause of concern and are

affecting the general sentiment for investing in building new capacities;

3) shortage in availability of skilled and unskilled labor is pushing up labor cost;

4) access to raising finances remains tight.

Slow-moving orders in the infrastructure segment (`2,659cr) as of 4QFY2012

stand at `1,622cr, thus resulting in 27% of order book (`5,916cr) being slow

moving. Thus, the execution pace going ahead would be muted, given the

slow-moving orders in the order book.


3/12


May 15, 2012 3

Projects update

On March 29, 2012, CCCL Infrastructure commissioned a 5MW solar power plant

by connecting it to the grid. On the SEZ projects front, three more parties have

signed a lease deed and another three have expressed their interest in taking land

on lease.

Exhibit 3:Revenue growth takes a hit


Exhibit 4:Decent order inflow for the quarter


Better-than-expected EBITDAM performance leads to higher PAT

CCCL gave a positive surprise on the margin front, as the company posted

significantly higher-than-expected EBITDA margin of 9.5%, registering a jump of

600bp/490bp on a yoy/qoq basis, against our expectation of 4.4%. The main

reason for margin improvement was lower cost of material and subcontracting

charges as a percentage of sales.

Interest cost came in at`29cr, reporting a jump of 142.8%/59.4% on a yoy/qoq

basis. On the bottom-line front, the company posted profit of `25cr in 4QFY2012

vs.`2cr in 4QFY2011, against our expectation of`1cr profit mainly on account of

margin improvement.

Exhibit 5:Positive surprise at the EBITDAM level


Exhibit 6:Earnings in black owing to higher EBITDAM


2.7

8.5

(3.4)

4.5

33.2

23.4

8.5 10.0

1.1 (0.2)

9.5

(10.0) (8.4)

(15)

(10)

(5)

0

5

10

15

20

25

30

35

40

0

100

200

300

400

500

600

700

4QFY09

1QFY10

2QFY10

3QFY10

4QFY10

1QFY11

2QFY11

3QFY11

4QFY11

1QFY12

2QFY12

3QFY12

4QFY12

Sales (` cr, LHS) Growth (yoy %, RHS)

678 693

443 352

1,706

553250

1160

1939

319 452 404(100)

(50)

0

50

100

150

200

250

-

500

1,000

1,500

2,000

2,500

1QFY10

2QFY10

3QFY10

4QFY10

1QFY11

2QFY11

3QFY11

4QFY11

1QFY12

2QFY12

3QFY12

4QFY12

Order Booking (` cr, LHS) Growth (yoy %, RHS)

7.1 7.38.9 9.0

11.4

8.37.8

9.7

3.5

4.8

1.4

4.6

9.5

-

2.0

4.0

6.0

8.0

10.0

12.0

-

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

4QFY09

1QFY10

2QFY10

3QFY10

4QFY10

1QFY11

2QFY11

3QFY11

4QFY11

1QFY12

2QFY12

3QFY12

4QFY12

EBITDA (` cr, LHS) EBITDAM (%, RHS)

4.3 4.34.7 4.7

5.3

3.5

2.83.4

0.2 0.1

(3.5)

(0.7)

4.3

(4.0)

(3.0)

(2.0)

(1.0)

-

1.0

2.0

3.0

4.0

5.0

6.0

(30.0)

(20.0)

(10.0)

-

10.0

20.0

30.0

40.0

4QFY09

1QFY10

2QFY10

3QFY10

4QFY10

1QFY11

2QFY11

3QFY11

4QFY11

1QFY12

2QFY12

3QFY12

4QFY12

PAT (` cr, LHS) PATM (%, RHS)


4/12


May 15, 2012 4

Order book analysis

As of 4QFY2012, CCCLs order book stood at`5,916cr (2.8x FY2012 revenue),

dominated by the infrastructure (45.0%) and commercial (41.5%) segments. The

industrial and residential segments accounted for the balance. During the quarter,

the company bagged orders worth `403cr (majority of which came from the

industrial (50%), commercial (46%) and residential segment (contributing the

balance). The companys order book is spread across price-protected (57.9%),

fixed price (22.4%) and without material (19.7%) contracts. Slow-moving orders in

the infrastructure segment (`2,659cr) as of 4QFY2012 stand at `1,622cr, thus

resulting in 27% of order book (`5,916cr) being slow moving.

Exhibit 7:Segmental order inflow for the quarter (`cr)


Exhibit 8:Order book at 2.8x FY2012 revenue(`cr)



5/12


May 15, 2012 5

Outlook and valuation

CCCL has been posting erratic numbers on the EBITDAM front and consequently

has been performing poorly on the earnings front as well since the past few

quarters. Slow-moving orders (`1,622cr, 27% of order book) and poor EBITDAM

performance expected for another 3-4 quarters would result in subdued

performance from CCCL going forward as well.Further, high interest cost would

result in earnings pressure in the near future.

Exhibit 9:Key assumptions

Order inflow (`cr) 2,512 2,166 3,537 3,114 3,891 4,316

Revenue (`cr) 1,841 1,976 2,199 2,128 2,526 2,792

Order backlog (Y/E) 3,323 3,392 4,968 5,953 7,319 8,842

Order book-to-sales ratio (x) 1.8 1.7 2.3 2.8 2.9 3.2


Exhibit 10:Angel EPS forecast vs. consensus

FY2013E 1.8 1.3 (30.5)

FY2014E 2.8 2.4 (14.4)



6/12


May 15, 2012 6

Recommendation rationale

As of 4QFY2012, of its total order book of`5,916cr, CCCL

had ~`1,622cr (27% of order book) worth of slow-moving orders in the

infrastructure segment, which would keep its revenue growth under check for the

next few quarters.

Since the past few quarters, CCCL has been

reporting EBITDAM of 1.4-4.8% (except 4QFY2012), owing to: 1) managements

error in estimating commodity prices for fixed price contracts; 2) high labor and

procurement costs; 3) low-margin legacy orders; and 4) higher employee and

sales and administration cost. Further, as per management, pressure on EBITDAM

is expected to remain for the next few quarters, which continues to be an overhang

on the stock.

In the past, CCCL has enjoyed superior return ratios,

because of which the stock traded at a premium to its peers. Currently, the

companys return ratios have taken a hit due its poor performance. Going ahead,

we see pressure on return ratios to continue and expect some significant

improvement only in FY2014.

Exhibit 11:Return ratios take a hit


27.8

14.916.6

7.7

(1.3)

5.58.1

35.3

17.519.3

13.2

7.39.6

11.3

(5.0)

-

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

FY2008 FY2009 FY2010 FY2011 FY2012E FY2013E FY2014E

RoAE (%) RoACE (%)


7/12


May 15, 2012 7

Exhibit 12:Recommendation summary

ABL 200 302 Buy 1,522 2,014 2,294 22.7 18.0 28.4 30.8 30.8 11.1 7.1 6.5 4.2

HCC 19 - Neutral 3,988 4,239 4,522 6.5 (3.7) (1.8) (0.8) - - - - 3.8

IRB Infra 112 186 Buy 3,131 3,821 4,582 21.0 14.9 15.0 16.9 6.5 7.5 7.5 6.6 -

ITNL 161 265 Buy 5,606 6,619 7,925 18.9 25.6 22.0 26.7 2.1 6.3 7.3 6.0 4.3

IVRCL 47 61 Buy 4,971 5,510 6,722 16.3 0.9 2.5 4.6 125.5 52.1 18.5 10.3 5.6

JP Assoc. 63 104 Buy 13,963 16,017 18,359 14.7 2.9 4.2 5.0 30.9 21.5 15.0 12.5 -

L&T 1,223 1,553 Buy 53,171 59,559 69,089 14.0 64.7 70.8 76.5 8.7 18.9 17.3 16.0 2.7

Madhucon 46 84 Buy 1,952 2,503 2,903 21.9 4.4 5.8 6.5 21.8 10.5 8.0 7.1 3.8

NCC 34 76 Buy 4,946 5,790 7,022 19.1 1.4 3.5 5.4 97.6 24.3 9.6 6.2 4.3

Patel Engg 90 - Neutral 3,573 3,609 3,836 3.6 14.9 14.0 14.5 (1.1) 6.0 6.4 6.2 2.7

Punj Lloyd 45 - Neutral 10,557 11,592 12,993 10.9 2.8 1.8 3.2 7.2 16.4 24.9 14.2 2.6

Sadbhav 133 199 Buy 2,604 2,989 3,314 12.8 9.3 10.2 11.3 10.5 14.3 13.1 11.7 2.7

Simplex In. 204 316 Buy 5,929 6,732 7,902 15.4 19.6 27.2 35.1 33.9 10.4 7.5 5.8 2.9

Source: Company, Angel Research;

Exhibit 13:SOTP breakup Across players

ABL 128 42 - - 174 58 - - - - 302

HCC (5) (20) 12 50 16 70 - - - - 23

IRB Infra 98 59 - - 64 39 4 3 - - 166

ITNL 53 20 - - 180 68 - - 33 12 265

IVRCL 41 67 - - - - 20 33 - - 61

JP Assoc. 34 32 27 26 - - - - 43 42 104

L&T 1,223 79 - - - - 330 21 - - 1,553

Madhucon 33 39 2 2 50 59 - - - 84

NCC 43 57 2 2 10 13 - - 22 28 76

Patel Engg 55 51 17 16 16 15 - - 19 18 106

Punj Lloyd 72 100 - - - - - - - - 72

Sadbhav 102 51 - - 98 49 - - - - 199

Simplex In. 316 100 - - - - - - - - 316



8/12


May 15, 2012 8

Profit & loss statement (Consolidated)

Other operating income

% chg 24.6 7.3 11.3 (3.2) 18.7 10.5

Total Expenditure 1,712 1,797 2,046 2,026 2,383 2,609

Net Raw Materials 1,439 1,545 1,744 1,705 1,920 2,108

Other Mfg costs 47 - - - 124 127

Personnel 106 114 143 157 157 173

Other 120 138 158 164 182 201

% chg (24.1) 39.5 (14.6) (33.2) 40.1 27.7

(% of Net Sales) 7.0 9.1 7.0 4.8 5.7 6.6

Depreciation& Amortisation 9 11 14 16 18 20

% chg (27.0) 40.7 (17.3) (37.7) 44.2 30.2

(% of Net Sales) 6.5 8.5 6.3 4.1 4.9 5.8

Interest & other Charges 18 33 49 85 81 92

Other Inc (incl pft frm As/JV) 9 6 5 9 7 7

(% of PBT) 8.5 4.5 5.5 82.4 13.6 9.2

% chg (31.0) 28.5 (33.2) (87.9) 337.4 54.0

Extraordinary Expense/(Inc.) - - - - - -

Tax 38 50 36 12 16 25

(% of PBT) 34.5 35.5 37.7 104.5 32.4 32.4

Less: Share of JV Partn profit 12.2 7.6 - -

Less: Minority interest (MI) - - - - - -

Prior period items - - - - - -

% chg (18.9) 26.6 (48.8) - - 54.0

(% of Net Sales) 3.9 4.6 2.1 (0.4) 1.3 1.9

% chg (18.9) 26.6 (48.8) (117.3) - 54.0


9/12


May 15, 2012 9

Balance sheet (Consolidated)

Equity Share Capital 37 37 37 37 37 37Preference Capital - - - - - -

Reserves& Surplus 479 552 591 571 594 634

Minority Interest

Total Loans 198 339 431 582 670 777

Deferred Tax Liability 44 60 61 61 61 61

Gross Block 161 190 220 250 280 310

Less: Acc. Depreciation 22 33 47 62 81 101

Net Block 138 157 173 187 199 209

Capital Work-in-Progress 6 15 36 36 36 36

Investments 57 9 3 33 43 53

Inventories 807 1,020 1,204 1,166 1,384 1,529

Sundry Debtors 9 12 8 7 9 10

Cash 130 170 85 156 132 126

Loans & Advances 144 156 217 252 254 314

Other - - - - - -

Misc. Exp. not written off 12 1 0 0 0 0


10/12


May 15, 2012 10

Cash flow statement (Consolidated)

Profit before tax (excluding MI) 111 142 83 4 50 78

Depreciation 9 11 14 16 18 20Change in Working Capital 89 221 189 15 112 133

Less: Other income 9 6 5 9 7 7

Direct taxes paid 24 38 36 12 16 25

(Inc.)/ Dec. in Fixed Assets (71) (38) (51) (30) (30) (30)

(Inc.)/ Dec. in Investments 42 47 6 (30) (10) (10)

Other income 9 6 5 9 7 7

Issue of Equity - - - - - -

Inc./(Dec.) in loans 72 141 93 151 87 107

Dividend Paid (Incl. Tax) 9 11 11 12 12 12

Others 0 6 6 - - -

Inc./(Dec.) in Cash 42 40 (85) 71 (24) (5)


11/12


May 15, 2012 11

Key Ratios

P/E (on FDEPS) 3.8 3.0 5.8 - 8.1 5.2P/CEPS 3.4 2.7 4.5 36.8 5.2 3.8

P/BV 0.5 0.5 0.4 0.5 0.4 0.4

Dividend yield (%) 3.4 3.4 3.4 3.7 3.7 3.7

EV/Sales 0.2 0.2 0.3 0.3 0.3 0.3

EV/EBITDA 2.7 2.5 4.1 6.9 5.7 5.1

EV / Total Assets 0.5 0.4 0.6 0.6 0.6 0.6

EPS (Basic) 3.9 5.0 2.5 (0.4) 1.8 2.8

EPS (fully diluted) 3.9 5.0 2.5 (0.4) 1.8 2.8

Cash EPS 4.4 5.6 3.3 0.4 2.8 3.9

DPS 0.5 0.5 0.5 0.6 0.6 0.6

Book Value 27.9 31.9 34.0 32.9 34.1 36.3

EBIT margin 6.5 8.5 6.3 4.1 4.9 5.8

Tax retention ratio 0.7 0.6 0.6 (0.0) 0.7 0.7

Asset turnover (x) 3.2 2.7 2.4 2.0 2.2 2.1

ROIC (Post-tax) 13.6 15.0 9.4 (0.4) 7.3 8.4

Cost of Debt (Post Tax) 7.5 7.8 8.0 - 8.8 8.6

Leverage (x) 0.1 0.2 0.4 0.6 0.8 0.9

Operating ROE 14.3 16.5 9.9 (0.1) 6.1 8.2

ROACE (Pre-tax) 17.5 19.3 13.2 7.3 9.6 11.3

Angel ROIC (Pre-tax) 20.8 23.3 15.0 8.1 10.7 12.5

ROAE 14.9 16.6 7.7 (1.3) 5.5 8.1

Asset Turnover (Gross Block) 14.4 11.3 10.7 9.1 9.6 9.5

Inventory / Sales (days) 143 169 185 203 184 190

Receivables (days) 2 2 2 1 1 1

Payables (days) 93 100 94 100 91 94

W. cap cycle (ex-cash) (days) 73 97 121 143 129 133

Net debt to equity 0.1 0.3 0.6 0.7 0.9 1.0

Net debt to EBITDA 0.5 0.9 2.3 4.2 3.8 3.6

Interest Coverage 6.5 5.2 2.8 1.0 1.5 1.8


12/12


May 15 2012 12

Research Team Tel: 022 - 39357800 E-mail: [email protected] Website: www.angelbroking.com

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decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should makesuch investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the companies

referred to in this document (including the merits and risks involved), and should consult their own advisors to determine the merits and

risks of such an investment.

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investment decisions that are inconsistent with or contradictory to the recommendations expressed herein. The views contained in this

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Note: Please refer to the important `Stock Holding Disclosure' report on the Angel website (Research Section). Also, pleaserefer to the latest update on respective stocks for the disclosure status in respect of those stocks. Angel Broking Limited andits affiliates may have investment positions in the stocks recommended in this report.

Disclosure of Interest Statement CCCL

1. Analyst ownership of the stock No

2. Angel and its Group companies ownership of the stock No

3. Angel and its Group companies' Directors ownership of the stock No

4. Broking relationship with company covered No

Note: We have not considered any Exposure below `1 lakh for Angel, its Group companies and Directors.

Buy (> 15%) Accumulate (5% to 15%) Neutral (-5 to 5%)Reduce (-5% to 15%) Sell (< -15%)

cccl result updated

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