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25.08.2019

AAKASHAYA PATRA EXCLUSIVE STOCK FOR INVESTMENT:

NCL Industries Limited (CMP Rs.104)
 ENTRY LEVEL: 100 to 95 STOP LOSS: 70 TARGET : 200 TIME FRAME: 12-24 MONTHS

NCL Industries Limited (NCL) - Hyderabad-based NCL Industries, incorporated in 1979, is into cement, particle boards, ready-mix concrete and hydro power. For the past three decades it has been supplying the construction industry with its top quality building materials through Nagarjuna Cement brand. It is a strong regional operator and has been a household name in Andhra Pradesh, popularly known as "Monagadu" cement in Telugu.NCL forward integrated into value-added products with cement boards and ready-mix concrete. It has two small hydro-electric plants, of 7.5MW in Andhra Pradesh and 8.25MW in Karnataka. NCL has one of the largest distribution networks across the country, with more than 1,600 cement dealers and 300 distributors for boards.Nagarjuna is the only private company in Andhra Pradesh which manufactures special 53-S grade cement. Cement Division: With its strategically-located 2.7m-TPA cement capacity, and a well-established brand Nagarjuna Cement, NCL is a robust regional cement manufacturer in south India. It is strong in rural markets through its wide network of over 1,600 cement dealers and more than 100 distribution and consignment agents It recently expanded its clinker capacity in Nalgonda to 2.6m tons(from 1.6m tons). It largely sells in the south, primarily in AP/Telangana (90%) and Tamil Nadu and Karnataka with strong brandrecall.Boards Division: Cement-bonded particle boards, made of 62% cement and 28% wood, popularly known as Bison Panels, was introduced by NCL in 1990 in collaboration with Bison Werke (Germany), the world leader in particleboard technology. They are fire-, water- and termite-resistant with a durability of cement and easy workability of wood and can be used externally and internally. To address mounting demand, it recently completed board's capacity expansion by 30,000TPA in Q3 FY18 through a mix of debt and internal accruals and post-expansion, Bison boards are manufacture data two plants with combined capacity being 90,000TPA.RMC Division & Energy:It has four RMC manufacturing plants, adequately geared to handle demand from vast urban housing development and infrastructure projects. Its energy division operates two mini-hydel generating plants: one of 7.5MW over the Srisailam right main canal in AP, the other of 8.25MW on the right bank high-level canal of the Tungabhadra Dam in Karnataka. With its low-cost cement-capacity expansion (to 2.7m TPA) and particleboard facilities (to 90,000 TPA),NCL is set to derive the full benefit of the cement and board demand besides anticipated operational savings and decline in interest costs. At the CMP, the stock trades at an EV/EBTIDA of 4x and an EV/ton of $29 on FY21E.Reliable management, dividend paying company and a turnaround story worth looking into it.

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