>RAIN COMMODITIES LIMITED: Expansion plans on track

RCL came out with better than expected set of numbers for Q4CY11 on the back of superlative performance by Carbon Products segment. While the topline was in line with our estimates at INR 1608 mn (up 38% YoY & 24% QoQ) led by 18% YoY increase in CPC volumes, net profit exceeded our estimates to INR 1802 mn in Q4CY11 (despite a forex loss of INR 294 mn due to USD denominated forex loan). Its plans of setting up 35 MW waste heat recovery plant by CY12 remains on track. The company has completed 85% of the buyback program at an average price of INR 31/share till date. We introduce CY13 estimates and maintain a BUY rating on the stock with a target price of INR 71/share.


■ CPC segment on the boil
RCL reported a revenue growth of 38% YoY & 25% QoQ to INR 16079 mn on the back of 41% YoY increase in Carbon Products revenues to INR 13995 mn. This superlative performance was aided by 18% growth in CPC volumes to 533000 tonnes & 24% growth in CPC realisations to $ 512/tn. In CY11, revenue of Carbon Product segment grew by 56% to INR 48292 mn aided by 4% increase in CPC volumes & 43% surge in realisations to $ 468/tn. Demand for CPC is healthy and RCL continues to identify new long-term sources for its GPC supplies worldwide due to its limited availability.


■ CPC EBIDTA/tn to remain between USD$90-100
EBIDTA of CPC segment improved significantly aided by 17% YoY & 11% QoQ increase in CPC EBIDTA margin to $123/tn. Currently CPC prices are hovering ~ $ 500/tn and management expects to negotiate the CPC pricing for H1CY12 in next few days. Although we are expecting some softness in CPC pricing, we expect CPC EBITDA margin to remain in the range of $90-100/tn going forward.


■ Cost pressure continue to dent Cement segment
Cement turnover improved by 20% YoY to INR 2081 mn aided by volume growth of 11% YoY to 523000 tonne & 8% increase in realisations to INR 3978/tn. Cost pressure continues to dent this segment as EBIDTA margin declined by 3% YoY & 22% QoQ to INR 682/tn. Volume is likely to remain muted due to political agitations in the state of Andhra Pradesh.




To read full report: RCL
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