Hold Sagar Cement; target of Rs 250: ICICI Direct

ICICI Direct's research report on Sagar Cement

Sagar Cements is a south based cement player with cement capacity of 8.25 MT. Region wise, AP/Telangana accounted for ~60% of sales followed by Tamil Nadu (16%), Karnataka (9%). Going forward, the company will be developing a presence in the faster-growing eastern and central market with recent commissioning of new 2.5 MT capacity • Self-reliance in power (61.5 MW), ability to switch between coal and petcoke for fuel requirement and split grinding units near market gives it cost advantage.

Outlook

However, higher debt for potential M&A to pose challenge in the mediumterm. Hence, we maintain HOLD rating on stock. We value Sagar at Rs 250 i.e.8.5x FY24E EV/EBITDA.

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