India Cements (ICEM) has seen it all – from M&A-led buoyancy (over past few years) to a more recent overhang of stakesale by new promoter UltraTech Cement (UTCEM; to comply with minimum public shareholding norms). Hereon, its back to fundamentals. UTCEM is taking commendable strides towards enhancing ICEM’s efficiency; it plans to – boost green power share (from 5% to 80%), upgrade kilns and facilitate brand-transition benefits. These measures offer visibility of >INR 1,000 EBITDA/t by FY28 (vs. INR 334 in Q2FY26) – in-line with guidance. Yet, an imminent margin jump may merely emplace ICEM back in the main league – ergo, at par with industry majors in South India. With competition stiffening and possibly pinching FY28E RoE, we value ICEM at 12x FY28E EV/EBITDA.
OutlookWe reinitiate coverage with a HOLD rating and TP of INR 422. While a merger with UTCEM appears an eventuality, its timeline as well as merger ratio (usually advised by an independent valuer) remains imponderable.
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