Stock Synopsis: Mangalam Cement

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Mangalam Cement

Printed From: The Equity Desk
Category: Investment Ideas - Creating winning portfolios!
Forum Name: Stock Synopsis
Forum Discription: A bried discussion of companies on very specific matters. Normally this is the prelude for further research as always members would be discussing quality companies with good management only
URL: http://www.theequitydesk.com/forum/forum_posts.asp?TID=2557
Printed Date: 21/Apr/2025 at 11:24pm

Topic: Mangalam Cement

Posted By: Monkey
Subject: Mangalam Cement
Date Posted: 07/Dec/2009 at 11:22pm

This stock is available at market cap of Rs. 353 cr at price of Rs. 126.50/-.
Debt / Equity ratio is 0.2.
ROE and ROCE are above 35% since last three financial year.
Net cash is Rs. 30 cr after deducting debt from cash on balance sheet.
P/E is 2.83 based on TTM earnings.
Last year's dividend is Rs. 5.50/- per share giving dividend yield of 4.3% at current price.
P/B is 1.22.
Gross block is Rs. 501 Cr and net block is Rs. 276 cr indicatting well depreciated assets.

Yes, this is cyclical industry and profit margins could be unusually high and might not be sustainable. Also, such stocks are best bought at bottom of business cycle and not at top.

Still, I think that P/E of less than 3 compensates for all above negatives. Also, with well depreciated assets, I guess current market cap is well below replacement cost.

Any views from forum members?

Replies:

Posted By: basant
Date Posted: 07/Dec/2009 at 6:12am

What is the capacity at present and after expansion (if at all there is one)?

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'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in

Posted By: shadows
Date Posted: 07/Dec/2009 at 7:22am

Mangalam Cement capacity: at 2 MT looks cheap to it's peers on PE basis.
55% div on FV:10 ->increasing dividend rate

B.K.Birla group and ISO certified.

'Birla uttam cement' ::Brand

24MW power capacity

CARE A+ rating.

Posted By: nitin_jagtap
Date Posted: 07/Dec/2009 at 9:48am

IMO...Replacement cost may not be the best way to go about judging the price once can pay atleast for some of the older cyclicals like mangalam,kesoram,century etc.

In this case I would like to focus on plant effeciency , cap utilization, input costs to see how effecient the company is in financial management

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Warm REgards
Nitin Jagtap

Posted By: Monkey
Date Posted: 08/Dec/2009 at 8:27pm

Originally posted by basant

What is the capacity at present and after expansion (if at all there is one)?

Following are based on latest annual report and subsequent announcement made by company:

Current capacity is 2 MTPA for cement.
Company generates 17.5 MW thermal power and 6.15 MW wind power for captive use.
Company has captive limestone mines.

Company has announced following expansion plans on 30th July '09:

New cement plan with capacity of 1.5 MTPA.
New thermal power plant for generating 17.5 MW thermal power for captive use.
Total cost of expansion is estimated to be Rs. 750 cr and to be completed within 18 months.
Company envisages meeting the project cost by Rs. 450 cr of borrowing and Rs. 300 cr of internal cash generation. (operating cash flow for last year was 136 cr)

Given the financing plan, balance sheet wil become quite leveraged one. Besides, I do not know where cement cycle stands today. If it is at peak and turning down now then company's cash flow generation can be affected. Also, if much awaited market correction indeed comes in then also company would be available cheaper.

So, if forum members can help me in following queries:

Are we due for down turn in cement cycle?
Am I getting good margin of safety by buying at P/E of less than 3?
Whether to wait for general stock market correction to buy this stock?

Posted By: master
Date Posted: 08/Dec/2009 at 9:43pm

1. On current indicators, Mangalam "looks" cheap for sometime now. But, north India which is its main market, is likely to see large cement capacity getting commissioned & unloaded in next few quarters.

2. FY11 revenues may actually dip below Rs 600 cr estimated for FY10.

3. Out of Rs 750 cr capex planned, debt of Rs 450 cr will push DER > 1.5 in a ready-to-rise interest rate regime. PAT estimates can vary but expectation for FY11 is more like Rs 50 cr.

4. EPS for FY11E in Rs 20-21 range would mean 6 to 6.5 times FY 11 for a BK Birla group company. In its cement peers, this is not exactly cheap. Limited upside.

5. On the positive side, better dividend yield > 4%, high ROCE > 45%, upcoming commonweatlh games, and markets looking for value bargains in current leg of the rally.

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Someone’s sitting in shade today because someone planted a tree long time ago.

Posted By: wiseowl
Date Posted: 08/Dec/2009 at 11:09am

B. K. Birla's granddaughter (Vidula Jalan) gets Mangalam Cement. So, it cannot be counted at par with Ultratech or Grasim which are B.K. / K.M. Birla companies.

Also, if I remember right, Mangalam Cement got out of BIFR some time back. Hope the expansion plan does not put it back under BIFR.

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You alone are responsible for your actions.

Posted By: BGKGURU
Date Posted: 16/Dec/2009 at 10:39pm

If people see negative they can see only negative.

I m very positive in mangalam cement.

25$/tonne.

I think it is cheapest stock.

After 2 years d/e ration should 1:1. that is not bad in growing economy with growing cement demand. If you will see future road project with other ongoing project like commonwealth,verious rural schemes,airport modernisation,nrega etc. i see demand will be much higher than supply so my target for mangalam is Rs.350-400 in 3 years.

One more positive promoter(bk birla group) sold shares and birla sunlife insurance bt 5% stake.

so may be management will be done by vidula jalan but control may be with cement baron mr. kumar mangalam birla.

One more point, if they will make same margin after 2 years also then they will make good profit in expanded capacity and so they can repay debt easily or d\e ratio will be in favour of equity(they may not be ableto pat long term loan as per agreement). So if someone bullish in cement.

mangalam is very good stock.

I m bullish in cement so i m buyer in mangalam.

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Respect the Markets and do MAKE mistakes, but see to it that you can afford to stay in the markets even after the mistake-RJ

Posted By: BGKGURU
Date Posted: 16/Dec/2009 at 10:41pm

motilal is also given buy call in mangalam. maximum buy price-Rs. 142

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Respect the Markets and do MAKE mistakes, but see to it that you can afford to stay in the markets even after the mistake-RJ

Posted By: master
Date Posted: 04/Jan/2010 at 9:29pm

this stock trades at an attractive valuation of 3.9x its FY11 earnings and EV/EBIDTA of 1.2x FY11E, with high FY11 ROE of +20%," says Sushil Finance research http://www.moneycontrol.com/news/recommendations/buy-mangalam-cement-targetrs-235-sushil-fin_433615.html - .

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Someone’s sitting in shade today because someone planted a tree long time ago.

Posted By: rakhi183
Date Posted: 03/Feb/2010 at 4:11pm

Can anybody tell me where Mangalam's limestone mine is located?.. and whether its existing lisences limestone reserves would be enough to support the capacity expansion of 1.5 mill tonnes that it is planning? I read in a report that it had applied to the government of Madhya Pradesh for a prospecting lisence but has not received any favourable response yet. The company is already operating at 85% of its current capacity and its inability to expand its capacity would lead to a kind of stagnation in its revenues.

Posted By: EMANI
Date Posted: 03/Feb/2010 at 8:03am

Mangalam cement.......... a BK BIRLA GROUP COMPANY appears to be one of the good stocks for investment .JUST LOOK AT THE STOCK DETAILS....
Market cap.....427 cr
EQ....................27 cr
NP....................96cr( 9 months C/Y).....97cr(12 months Mar2009)
Sales..............470cr(9 months)...........647cr(12months.Mar2009)
EPS...................36(9 months)..............34(12 monthsMar2009)
BV...................143
PE.......................4.42
ROCE................45.54
RONW...............38.42
Debt equity.........0.17

                                   The company is establishing a new cement plant of 1.5 m MT with 17.5 mw thermal power plant at an outlay of 750 cr of which 300cr will be internal accruals and contemplate the completion with in 18 months .I think the scrip deserves to be invested.
                I request the TED members to express their opinion.

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esn

Posted By: EMANI
Date Posted: 03/Feb/2010 at 8:05am

The trailing 12 months EPS is 50 and the scrip is available at a PE of 4 against the industry average of 10.71

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esn

Posted By: EMANI
Date Posted: 03/Feb/2010 at 8:07am

Even a conservative EPS for Mar2010 (full 12months) is taken at 45 and a reasonable PE of 7 should push the stock to 300+ levels.

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esn

Posted By: basant
Date Posted: 03/Feb/2010 at 8:42am

For the Pe computation just check the discount with the leader Acc and then try to apply it unless the leader's pe expends the others will trade at similar discount valuations.

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'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in

Posted By: EMANI
Date Posted: 03/Feb/2010 at 9:41am

Thanks Basantji. ACC is currently trading at 10PE and Mangalam is at significant discount as it is available at 4 PE.Some of the mutual funds have also invested int he scrip.
            SBI MAGNUM......201838 shares
             HSBC MIP..........138600 shares
            DBS CHOLA SMALLCAP.....15563 shares

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esn

Posted By: basant
Date Posted: 03/Feb/2010 at 10:06am

What I wanted to stress on was the historical discount maybe over the past 3 years and then if that average was above the current discount we can argue the case for a expending Pe.

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'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in

Posted By: EMANI
Date Posted: 05/Feb/2010 at 2:00pm

The average PE for ACC from dec 2007 to dec 2009 is 11.02 and that of Mangalam is 3.7 during the same period.






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esn

Posted By: EMANI
Date Posted: 05/Feb/2010 at 2:26pm

Mangalam is showing resilience at around 150 levels.

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esn

Posted By: rakhi183
Date Posted: 08/Feb/2010 at 10:46am

Shareholding Pattern
Period end	Dec-09	Sep-09	Jun-09	Mar-09
Promoter and Promoter Group	25%	28%	28%	27%

Public	75%	72%	72%	73%
Institutions	11%	15%	14%	18%
FII	5%	10%	9%	9%
DII	6%	5%	5%	9%
Non Institutions	64%	56%	57%	55%
Bodies Corporate	35%	28%	28%	27%

promoter holding and the institutional holding reduced by 3% and 4% respectively in the last quarter...not a very good sign??

Posted By: Circuit
Date Posted: 24/Aug/2010 at 3:41pm

http://www.bseindia.com/stockinfo/anndet.aspx?newsid=f93bdce5-f21c-4fc0-9e7b-7db0f0b67cc8 - Shubh Mangalam (Merger) approved for Mangalam Pair Wink

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Fundamentalists and anticipators may have difficulties with risk control because a trade keeps looking ‘better’ the more it goes against them....Ed Seykota

Posted By: brijwanth
Date Posted: 29/Aug/2010 at 12:11pm

225/1998

MANGALAM TIMBER PRODUCTS LTD.

RAWDON CHAMBERS 11A RAWDON STREET, 3RD FLOOR CALCUTTA-700017

Declared No Longer Sick

16/11/2005

Accorfing to BFIR it is Mangalam Timber and not cement as said by one of the menber

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Past will not be repeated in future but peaks and troughs do revert to mean, period and order of those peaks, troughs and mean days is the one i.e. not predictable- riser3 valuations

Posted By: brijwanth
Date Posted: 30/Aug/2010 at 5:21pm

Things are moving pretty fast, Kesoram is buying stake on one hand and Mangalam Timber is being forced up on

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Past will not be repeated in future but peaks and troughs do revert to mean, period and order of those peaks, troughs and mean days is the one i.e. not predictable- riser3 valuations

Posted By: excel_monkey
Date Posted: 10/Nov/2010 at 4:25am

One should not talk about death but demise of B.K. Birla would bring a re-rating of Kesoram Industries as it would become part of Aditya Birla group under control of Kumar Mangalam Birla

Originally posted by wiseowl

B. K. Birla's granddaughter (Vidula Jalan) gets Mangalam Cement. So, it cannot be counted at par with Ultratech or Grasim which are B.K. / K.M. Birla companies.Also, if I remember right, Mangalam Cement got out of BIFR some time back. Hope the expansion plan does not put it back under BIFR.

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