Motilal Oswal 's research report on India Cement
India Cement (ICEM)’s 1QFY21 result was a surprise, led by a sharp rise in realization and lower fixed costs. EBITDA per ton, thus, reached decadal highs of INR1,090/t in 1QFY21 (from decadal lows of INR255/t in 4QFY20), driving 131% QoQ growth in EBITDA. We raise our FY21 EBITDA estimate by 17%, after factoring lower costs, but keep FY22 estimates largely unchanged (as discretionary cost cuts should normalize). Maintain Neutral. Any potential change in ownership and management control is a key monitorable.
ICEM trades at 9.3x FY22E EV/EBITDA and USD55/t of capacity. We value it at 9x FY22E EV/EBITDA to arrive at TP of INR114. Maintain Neutral.
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