Buy India Cements; target of Rs 220: KR Choksey

KR Choksey's research report on India Cements

Total Sales stood at INR 15243 mn which was up by 16.1% y-o-y and 6.4% q-o-q. Volume growth stood at 1.75% y-o-y reaching 2.9 MT as against 2.85 MT last year (amalgamated basis). Lower volume growth was primarily on account of cash crunch due to demonetization, restrictions on sand availability and political issues in Tamil Nadu.

Outlook

On account of lower capex, healthy volume growth outlook, financial de-leveraging and sustainable margins; we value India Cements Ltd at an EV/EBITDA of 8x and EV/ton of $90 on FY19E arriving at a target price of INR 220/share. Maintain BUY.