
	NCL INDUSTRIES LTD.

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SHARETIPSINFO >>Research Reports >> NCL INDUSTRIES LIMITED (23-05-2009)

LISTING	NSE
CMP	Rs 39
52 WEEK HIGH/LOW	Rs 46/Rs20
FACE VALUE	Rs 10
PE RATIO	4
AVERAGE VOLUME	54900
DIV	25%
DIV YIELD	6.6%

COMPANY OVERVIEW:
The Company was established on 10th September 1979. It was promoted by K.Ramachandra Raju and his associates and APIDC. The main objective of the company is to manufacture cement and ceramics. Company name was changed to Nagarjuna Cement ltd (NCL) in the year 1987.

Product Mix:

PRODUCT NAME	SALES VALUE(in crore)	PRODUCT MIX
CEMENT	Rs178.06	64.75%
CEMENT BOARD	Rs36.88	13.41%
CLINKER	Rs25.16	9.15%
PREFAB	Rs21.12	7.67%
POWER	Rs12.5	4.54%
TRADING	Rs1.26	0.45%

Dividend Track Record of 5 years:

YEAR	DIVIDEND%
2004	25%
2005	22%
2006	15%
2007	10%
2008	7.5%
AVERAGE DIVIDEND	15.9%

INVESTMENT RATIONAL:
Operating profit margin has doubled due to increase in operating efficiency.
Net profit margin too improved 2.5% to 14%.
Good interest cover means company can service its debt obligation.
EPS has grown at CAGR of 40%.
The demand for low cost housing material is here to stay. This segment is not affected by the recession. As the recession has mostly leveraged person or industry.
Huge investment from govt for rural housing will increase the demand for company’s product.

SHAREHOLDING PATTERN:

	NO.OF SHARES	% OF TOTAL
PROMOTER	14631430	43.27%
INSTITUTION	15090	0.04%
GENERAL PUBLIC	19173163	56.69%
GRAND TOTAL	33819683	100%

FINANCIAL:

	31/03/05	31/03/06	31/03/07	31/03/08
TOTAL INCOME	92.32	127.52	192.23	194.23
EXPENDITURE	-79.19	-110.48	-147.86	-124.63
OPERATING PROFIT	13.13	17.04	44.37	69.6
DEPRECIATION	-4.52	-4.66	-6.6	-10.95
PBIT	8.61	12.38	37.77	58.65
INTEREST	-3.57	-5.23	-9.14	-16.18
PBT	5.04	7.15	28.63	42.47
TAX	-2.66	-2.91	-2.26	-13.36
PAT	2.38	4.24	26.37	29.11

CHANGE IN TOTAL INCOME: CAGR IN TOTAL INCOME IS 28.1%.

CHANGE IN OPERATING INCOME: CAGR IN OPERATING INCOME IS 74.6%.

CHANGE IN NET PROFIT: CAGR IN NET PROFIT IS 130.43%.

RATIOS:

	31/03/05	31/03/06	31/03/07	31/03/08
EPS	0.704142	1.254438	7.801775	8.612426
OPM	14.22227	13.36261	23.08173	35.83381
NPM	2.57799	3.324969	13.71794	14.98739
INTEREST COVER	2.411765	2.367113	4.132385	3.624845

Key Highlights:
EPS zoomed from just Rs0.7 in FY2005 to Rs8.6 in FY2008.
OPM improved from 14.2%in FY2005 to 35.8%in FY2008.
NPM improved from 2.4%in FY2005 to 14% in FY2008.
Interest Cover improved from 2.4 times to 3.32 times.

COMPARISION OF Q3FY2009 WITH Q3FY2008:

	31/12/07	% CHANGE	31/12/08
TOTAL INCOME	50.79	62.55%	82.56
EXPENDITURE	-29.29		-59.69
OPERATING INCOME	21.5	6.40%	22.87
DEPRECIATION	-2.9		-3.38
PBIT	18.6		19.49
INTEREST	-4.9		-4.89
PBT	13.7		14.6
TAX	-7.54		-5.92
PAT	6.16	41%	8.68

Key Highlights:
Total Income zoomed by 62.55%.
Operating income increased by just 6.24% due to lower OPM (operating profit margin) during the Q3FY2009.
Net Profit surged by 41%. This can be attributed to lower tax outgo and lower base.

VALUATION & OUTLOOK:
At cmp of Rs38.5 the stock is trading at 4x to trailing twelve months earning. We on very conservative basis value the company at 6X.So the fair value of the stock comes at Rs56. We maintain that low cost housing material which is the core business of the group will always be in demand. Company will maintain its earnings growth though not with pace of FY2008 but still company will grow at least at rate of 20%.
After recent surge in the stock price still stock remains undervalued. Company consistently pay dividend. At current market price the dividend yield stands at 6.6%. The good dividend yield limits some downside in the stock.

CONCLUSION:
We maintain buy on the counter. It would be prudent to buy on every dip this will increase investors margin of safety. Stock should be bought with time horizon of 8-10 months.

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