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Last Updated : May 29, 2019 10:00 PM IST | Source: Moneycontrol.com

Buy Sagar Cements; target of Rs 800: ICICI Direct

ICICI Direct is bullish on Sagar Cements has recommended buy rating on the stock with a target price of Rs 800 in its research report dated May 24, 2019.

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ICICI Direct's research report on Sagar Cements


Sagar Cements reported a mixed set of Q4FY19 numbers, beating our volume and thereby revenue forecast. However, operating margins were a negative surprise. Revenues for Q4FY19 witnessed 24.1% growth to Rs 358.8 crore led by 23.5% growth in volumes to 0.95 MT (vs. I-direct estimates of 0.91 MT). Realisations were broadly in line with our estimates growing 1.3% YoY to Rs 3875/t. Higher other expenses resulted in margins disappointment. EBITDA margin for the quarter was at 16.9%, expanding 373 bps YoY but below I-direct estimates of 18.2%. EBITDA/t increased 30% YoY to Rs 650/t but remained below I-direct estimate of Rs 700/t. EBITDA, however, came in at Rs 61.7 crore, broadly in line with I-direct estimate of Rs 63.7 crore. The company reported a net profit of Rs 18.7 crore (vs. I-direct estimate of Rs 18.3 crore), growing 4.7% YoY.


Outlook


With limited clinker based additions expected to come up in the southern region in relation to the strong traction of cement consumption backed by IHB segment, real estate and infrastructure spends, increasing presence in the east led by ramping up of the Vizag unit, we believe the company would be able to grow at a healthy pace. Hence, we maintain our BUY rating on the stock with a target price of Rs 800 per share at 9.7x FY21E EV/EBITDA (EV of $67/tonne).


For all recommendations report, click here


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First Published on May 29, 2019 10:00 pm
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