Hold Mangalam Cement; target of Rs 212: ICICIdirect

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26 Aug, 2025 12:21

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ICICIdirect.com's report on Mangalam CementMangalam Cement (MCL) reported a subdued set of Q1FY16 numbers. Revenues during the quarter declined sharply by 7.3% YoY led by a sharp fall in realisation (down 16.8% YoY). Demand across the northern region (ex-Rajasthan) continued to remain weak during the quarter. The sales volume growth of 11.4% YoY can mainly be attributed to capacity expansionEBITDA/tonne declined 38.1% YoY to Rs 262/tonne due to higher employee cost (up 40.5% to Rs 270/tonne on hiring of 200 employees) and power & fuel cost (up 5.4% to Rs 1204/tonne on higher clinker production)The company intends to further expand its grinding capacity by 0.5 MTPA for which it will incur ~Rs 100 crore capex for FY16E"At the CMP of Rs 231, the stock is trading at 9.8x its FY16E and 7.1x its FY17E EV/EBITDA, respectively. After the subdued performance in a seasonally strong quarter Q1FY16 and ongoing weakness in demand, we expect demand growth to remain low at ~3% in northern India for FY16. Consequently, we lower our revenue estimates by 10.5% and 14.5% for FY16E and FY17E, respectively. Hence, we downgrade the stock to HOLD with a revised target price of Rs 212/share (i.e. at 6.5x FY17E EV/EBITDA)", says ICICIdirect.com research report.For all recommendations, click here Disclaimer: 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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