Buy India Cements; target of Rs 112: Angel Broking

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26 Aug, 2025 12:21

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Angel Broking's report on India CementsFor 1QFY2016, India Cements (ICEM)’ operating performance is better than our as well as street estimates. The company reported an EBITDA growth of 19.9% yoy to `195cr, which is above our estimate of `176cr. The EBITDA margin for the quarter improved by 500bp yoy and came in at 18.2%, above our estimate of 15.3%. Consequently the net profit jumped to `40.1cr as against a loss of `3cr in the same quarter last year. The net profit came in higher on account of betterthan- expected EBITDA numbers and lower interest expenses. The top-line for the quarter stands below our estimate, mainly due to higher-than-expected fall in cement volume. The realization/tonne improved by 18.4% yoy to `5,045, which is above our estimate of `4,949.EBITDA margin jumps 500bp yoy: ICEM’s top-line fell by 13% yoy, impacted by weak demand in its key markets which are situated in South India. The company’s cement sale volume for the quarter is down 18% yoy to 2.1mn tonne (mt) and is below our estimate of 2.29mt. Cement realization increased by 18.4% yoy to `5,045/tonne on account of stable cement price in its key South region. The OPM improved by 500bp on a yoy basis and stood at 18.2% on strong realization and decline in operational costs. The company reported an operating profit to `195cr, an increase of 19.9% yoy. The EBITDA/tonne came in at `929. Higher EBIDTA and lower interest expenses increased the net profit to `40.1cr.Outlook and valuation: ICEM’s return ratios have remained subdued over the years due to weak profitability. However, we expect the company’s earnings profile to improve going ahead due to better demand and stable realizations, thus resulting in higher return ratios. We expect revenue to grow at a CAGR of 9.7% and EBIDTA to grow at CAGR of 28.8% over FY2015-17. At the current market price, the stock trades at 4.5x FY2017 EV/EBIDTA and at an EV/tonne of $52 on FY2017 blended capacity. We recommend a Buy rating on the stock with a target price of `112(7.5x EV/EBIDTA and EV/tonne of $60).For all recommendations, click hereDisclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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