KR Choksey is bullish on Sagar Cements has recommended buy rating on the stock with a target price of Rs 972 in its research report dated March 20, 2017.
KR Choksey's report on Sagar Cements
Sagar Cements Ltd (SCL), a South based company, possesses a manufacturing capacity of 4.3 MTPA and a captive power capacity of 25 MW. SCL enjoys a healthy presence in South with cement dispatches of 44% to Andhra Pradesh & Telangana and 20% to Karnataka. Further, SCL plans to increase its exposure in the eastern markets (Orissa) post the acquisition of grinding unit in Bayyavaram in Vizag region of AP.
Consequently, we value Sagar Cements Ltd at an EV/EBITDA of 7.5X and EV/ton of $60 on FY19E and arrive at a target price of INR 972 translating into a 30% upside from current price of INR 748 subject to further re-rating depending upon volume growth and margin improvements.
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