Add Deccan Cements, target price Rs 520: HDFC Securities

HDFC Securities has add call on Deccan Cements with a target price of Rs 520. The current market price of Deccan Cements is Rs 513.2. Time period given by analyst is one year when Deccan Cements Ltd. price can reach defined target.

Deccan Cements Ltd., incorporated in the year 1979, is a Small Cap company (having a market cap of Rs 715.50 Crore) operating in Cement sector.

Deccan Cements Ltd. key Products/Revenue Segments include Cement, Power Generation, Other Operating Revenue and Scrap for the year ending 31-Mar-2021.


Financials
For the quarter ended 30-06-2022, the company reported a Standalone Total Income of Rs 196.76 Crore, up 3.68 % from last quarter Total Income of Rs 189.77 Crore and down -13.28 % from last year same quarter Total Income of Rs 226.89 Crore. Company reported net profit after tax of Rs 20.68 Crore in latest quarter.

Investment Rationale
It maintains ADD rating on Deccan Cements (DCL), with a revised target price of INR 520/sh (6x its Mar-24E EBITDA). The company reported mixed performance in Q1FY22. While utilisation remain subdued, cost controls drove up unitary EBITDA 40% QoQ to a healthy INR 798 per MT (in a tough environment). DCL received the much awaited environment clearance (EC) for its 1.4mn MT brownfield clinker expansion and civil work has started. The total project (2mn MT IU) is expected to be operational in FY25.

Promoter/FII Holdings
Promoters held 56.24 per cent stake in the company as of 30-Jun-2022, while FIIs owned 8.14 per cent, DIIs 0.43 per cent.