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Rain Commodity - BUY Report from PINC

MUMBAI: PINC has suggested 'buy' on Rain Commodity for the 12-month price target of Rs 300. The robust performance of the cement business also inspires confidence in the outlook for the company and hence PINC has revised upwards estimates.

At the CMP of Rs122 the stock is trading at an EV/EBIDT and PE of 3 times and 1.7 times its CY09E earnings. Buoyant demand for CPC coupled with stable RPC prices afford strong margin protection and provide visibility for profits in the near term.

Also Read: Rain Commodities - Multibagger stock update

While calcined petroleum coke volumes were stable QoQ at 0.58 mn mt, realisations vaulted 35 per cent QoQ to $420 per million tonne, providing a boost to revenues. Higher cement despatches of 0.61mn mt (+17% QoQ) from its new Kurnool facility coupled with buoyant realisations at Rs4k/mt (+4% QoQ) resulted in healthy jump in revenues from cement division to Rs 230 crore (+22% QoQ).

Read: Multi Bagger: Rain Commodities

Sourcing of GPC at competitive rates ($210/mt) enabled Rain to offset the dip in profitability on account of cement operations at the new facility. OPM stood at 30.4 per cent (+490bps QoQ) while operational profits rose 45 per cent QoQ to Rs 400 crore. Despite a charge of Rs 44 crore on account of M-to-M losses on restatement of forex loans, the surge in operational profits was sufficient enough to boost net profits 81 per cent QoQ to Rs 170 crore.

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This post was written by: Franklin Manuel

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