KR Choksey's research report on India Cements
India Cements Ltd (ICEM), largest cement manufacturer in the South, has a 15.55 MTPA capacity with 12.95 MTPA capacity in South while 1.1 MTPA capacity in Maharashtra and 1.5 MTPA capacity in Rajasthan (Subsidiary-Trinetra Cement Ltd). The cement demand in South was muted over FY12-FY16 growing by a meager 2.2% on account of subdued Government spending in infrastructure, political issues in AP and flattish growth in Tamil Nadu.
OutlookOwing to strong presence in southern market, improvement in operating efficiencies, lower capex, financial deleveraging and improvement in return ratios, we value India Cements Ltd at an EV/EBITDA of 8X FY-19E arriving at a price target of INR 190/share translating into a 31.25% upside from the current price of INR 145.
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