OCL India
Current market price: Rs 126
Fair value: Rs 197
Crisil Equities has assigned a fundamental grade of 3/5 to OCL India. The company has the largest cement manufacturing capacity in Orissa, accounting for 22 per cent of 33.4 mtpa capacity in East India. It enhanced capacity from 2 mtpa to 5.35 mtpa and plans to install a captive power plant of 54 Mw by December 2010. Crisil Equities expects OCL’s revenues to grow at a two-year CAGR of 14 per cent to Rs 1,800 crore in 2011-12, while EPS is expected to increase from Rs 29.4 to Rs 47 in 2011-12. Based on an EV/Ebitda multiple of 3.1 and 2010-11 Ebitda of Rs 430.5 crore, it has arrived at a one-year fair value of Rs 197, which translates into a valuation grade of 5/5, indicating ‘strong upside’. Notably, OCL trades at an EV/tonne of Rs 2,226, a discount of over 50 per cent to peers.
— Crisil Equities