Shares of India Cements plunged 13 percent to Rs 303 per share on January 22, weighed down by disappointing December quarter (Q3FY25) results that highlighted the company's deepening financial woes.
The cement manufacturer’s net loss ballooned multi-fold YoY to Rs 428 crore in Q3FY25, compared to a modest Rs 16 crore loss in the same quarter last year. Adding to the financial strain was an exceptional loss of Rs 190 crore in the quarter ended December 31, 2024.
Revenue from operations also witnessed a steep 16.5 percent year-on-year decline, falling to Rs 903.2 crore from Rs 1,081.9 crore in Q3FY24, reflecting weaker demand and pricing pressures in a challenging macroeconomic environment.
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At the operating level, the situation was even grimmer. India Cements posted an EBITDA loss of Rs 188.4 crore in Q3FY25, a stark reversal from the EBITDA profit of Rs 49 crore reported in the corresponding quarter of the previous year. This erosion in profitability highlights escalating costs and subdued operational efficiency.
In a major corporate development, the Competition Commission of India (CCI) last month approved a Rs 7,000 crore deal allowing UltraTech Cement, helmed by billionaire Kumar Mangalam Birla, to acquire a controlling stake in India Cements. UltraTech Cement boosted its shareholding from 32.7 percent to 55.5 percent, effectively making India Cements its subsidiary.
Analysts believe this acquisition could serve as a lifeline for the struggling company. The synergies from UltraTech’s operational expertise, economies of scale, cost optimization measures, and expansive distribution network are expected to bolster India Cements’ competitiveness.
Despite these strategic positives, the immediate financial outlook remains bleak. Analysts at Motilal Oswal have maintained a 'Sell' rating for the stock, valuing India Cements based on a replacement cost (EV/t of $100) and setting a target price of Rs 310.
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