Primarily owing to surge in electricity prices and lower sales volume, the cumulative profit after taxation (PAT) of Kohat Cement Limited (KOHC) is anticipated to reduce in 9MFY15 to Rs 2,112 million (EPS: Rs 13.67) which is 13% YoY down when compared to a PAT of Rs 2,429 million (EPS: Rs 15.72) in9MFY14.
The corporate results would be announced in the meeting of the board of directors of the company which is scheduled to be taken place on Mar 31, 2015. The bottom-line however is likely to take support from rise in other income and lower finance cost.

Bottom-line to grow 9% QoQ

On QoQ basis however the bottom-line is expected to post positive growth of 9% where the PAT of the company is expected to total Rs 746 million (EPS: Rs 4.83) in 3QFY15 versus Rs 683 million (EPS: Rs 4.42) in 2QFY15.
This growth in earning is attributed to decline in cost of goods sold and rise in other income. However net revenue of the company to reduce due to plant shutdown for 15 days.

Cumulative top-line to slide 4% YoY

As mentioned above that the volumetric sales of the company to remain low during the period, therefore this would affect the net revenue of the company which is likely to reduce by 4% YoY in 9MFY15 to Rs 8,753 million versus Rs 9,162 million in 9MFY14. Due to plant closure, the sales volume of the company is anticipated to decrease by 7% YoY in 9MFY15 to 1.28 million tons versus 1.37 million tons of the cement sold in the identical period in FY14. On the other side due to hike in electricity prices, the cost of sales of the company to surge by 5% YoY in 9MFY15 to Rs 5,669 million versus Rs 5,381 million in 9MFY14.
Therefore the gross profit would drop by 18% YoY in 9MFY15 to Rs 3,084 million versus Rs 3,782 million in the similar period in FY14. The gross profit margin would reduce to 35.2% in 9MFY15 as against 41.3% in 9MFY14.

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We have a ‘Market Weight’ stance on the scrip which is trading at a price of Rs 182.55/share offering an upside potential of 12% to our December’15 target price of Rs 204/share.