Buy Sagar Cements; target of Rs 299: Geojit

Geojit's research report on Sagar Cements

Sagar Cements Limited (SCL), established in 1985, is a south India based cement manufacturer with a capacity of ~10.5MT (South-8MT, Central-1MT, East-1.5MT). SCL has a total captive power capacity of 96.96MW. We maintain our BUY rating with a revised target price of Rs. 299, factoring in healthy volumes and margin outlook. Q1FY25 revenue grew by 4% YoY, partially impacted by drop in realization (-5% YoY). However, volumes improved by 9%YoY aided by ramp up in acquisitions. Lower fuel prices, along with healthy volumes, aided operating profit to increase by 53% YoY. EBITDA margin improved by 270bps YoY to 8.3%. • Cement prices witnessed a drag since March quarter which is expected to improve post monsoon.

Outlook

We reiterate our BUY rating and value SCL on SOTP basis, with cement business at 10x FY26E EV/EBITDA, to arrive at a revised target price of Rs. 299.