Sell India Cements; target of Rs 65: ICICI Securities

ICICI Securities research report on India Cements

India Cements’ (ICEM) Q4FY20 EBITDA sharply declined 59% YoY to Rs855mn, significantly below our/ consensus estimates owing to lower than expected realisation and volumes. Unlike peers, realisation declined 3% QoQ/ 6% YoY (ISec: +2% QoQ); while volumes declined 21% YoY to 2.65mnte (I-Sec: 15% YoY decline). EBITDA/te declined 42% YoY to 24-quarter low at Rs354/te. Consolidated net debt increased by Rs2.4bn YoY to Rs36.3bn owing to low profitability and further investment of Rs0.5bn in various subsidiaries/associates in FY20.

Outlook

We maintain our FY21-22E EBITDA with unchanged target price of Rs65/share based on 7x FY22E EV/E. Maintain SELL, as net debt to EBITDA inches to ~6x amidst rich valuation at 9.4xFY22E EV/E.

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