Motilal Oswal's research report on India Cements
India Cements (ICEM) reported EBITDA of INR819m (21% beat) in 1QFY26 vs. operating loss of INR310m in 1QFY25. The improvement in operating performance was led by cost control measures, as opex/t was down ~15% YoY in 1QFY26. Sales volume grew ~11% YoY to 2.2mt (~6% below our estimate). The company reported net loss of INR138m (estimated loss of INR276m) vs. a loss of INR1.6b in 1QFY25. Following its acquisition by UTCEM, the company has initiated a capex plan aimed at enhancing efficiency and production. This plan includes the installation of WHRS, pre-heater modification, cooler upgrades, and alternative fuel technologies. The capex will be funded through a mix of internal accruals and debt, with the goal of keeping net debt below INR500m upon completion. The company aims to achieve EBITDA/t of INR1,000 by FY28 vs. INR376 in 1QFY26. ICEM will continue to operate as a separate entity for now and revisit the decision in FY27-28.
Outlook
We estimate the company’s revenue CAGR at ~10% over FY25-28, led by a volume/realization CAGR of ~8%/2%. We expect the company to achieve EBITDA/t of INR350/525/760 in FY26/27/FY28. We value ICEM at an EV/t of USD80 and arrive at our TP of INR280. Reiterate Sell.
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