Accumulate India Cements; target Rs 115: Kotak Sec

Kotak Securities' report on India Cements

"Revenue growth of the company was impacted by lower dispatches during quarter and came lower than our estimates. Decline in freight cost per tonne led to reduction in overall expenditure. However, huge debt burden coupled with lower than expected dispatches led to company posting net loss during the quarter. Cement prices have improved on sequential basis, but demand continues to remain weak in Southern region."

"At current market price of Rs 107, stock is trading at 6.3x and 5.7x EV/EBITDA on FY16 and FY17 estimates respectively. We revise our estimates downwards to factor in 9MFY15 performance. We value company at 6x EV/ EBITDA on FY17 estimates and arrive at a revised price target of Rs 115 (Rs 101earlier). We upgrade the stock to ACCUMULATE from SELL earlier due to sharp uptick witnessed in cement prices in southern region. Further development on reorganization of Chennai Super Kings Cricket Ltd would also be watched out for going forward", says Kotak Securities research report.

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