Sagar Cements Ltd. share price target

Cost Saving Measures Aid Performance: Maintain BUY Sagar Cements (SCL) has reported a slightly better-than-estimated operating performance in 3QFY18, with its consolidated EBITDA growing by a moderate 7% YoY to Rs316mn vs. our estimate of Rs298mn. Though the average realisation/tonne declined by 8.7% YoY and 6.5% QoQ to Rs3,655 (1% steeper than our estimate), SCL's operating cost/tonne substantially decreased by 6.6% YoY and -2.6% QoQ to Rs3,203. Notably, savings of Rs40mn owing to new 6MW WHRS, reduction in lead distance and gradual shift to petcoke usage in BMM unit aided to SCL contain costs. Consolidated sales volume rose by 44% YoY and 14% QoQ to 0.68mnT...

We are pretty enthused by Sagar Cement Ltd.'s astute understanding of the cement cycle ,meticulous and careful selection of acquisition targets and its relentless focus on cost efficiencies. SCL is our favourite way to play the cement growth story in South India.

SGC is well placed to capitalize on strong opportunities in the underlying markets of AP/Telangana, where demand has grown in excess of 20% YoY over the past 12-15 months. We expect cement demand in AP/Telangana to grow at 12-15% over the next two years, driven by the government's push toward infrastructure development and creation of a new state capital of Amravati (Andhra Pradesh). This is likely to result in strong volume growth for SGC. Diversification and low-cost capacity addition to bring in stability In an attempt to diversify geographically, SGC is likely to increase capacity by...

Sagar Cements Ltd (SGC) is primarily a south-based cement player having a total capacity of ~4.3 MT. Over the years, the company has diversified its operations into other regions like...

Sagar Cements (SCL) continued to report a healthy set of numbers in 2QFY18 beating our estimates mainly due to better-than-expected operational performance. Its reported EBITDA surged by 33% YoY to Rs384mn vs. our estimate of Rs329mn. A significant reduction in other expenditures/tonne (-22% YoY and -7% QoQ) and a lower-than-expected raw material prices led to this outperformance. However, surge in fuel and freight cost led to 4% YoY rise in operating cost/tonne to Rs3,288. EBITDA/tonne came in at Rs643 compared to Rs565 and Rs666 in 2QFY17 and 1QFY18, respectively. Net profit stood at Rs85mn as against Rs0.4mn and Rs100mn reported in 2QFY17 and 1QFY18, respectively. We continue to believe that likely improvement in...

ICICI Securities Ltd | Retail Equity Research Sagar Cements reported a healthy set of Q1FY18 numbers. Revenues increased 31.1% YoY to | 258.8 crore mainly led by 19.3% YoY increase...

Sagar Cements (SCL) has reported a stellar performance in 1QFY18 topping our estimate mainly owing to significant recovery in average realisation (+22% YoY and +12% QoQ). Consolidated EBITDA grew by 64% YoY and 63% QoQ to Rs425mn vs. our estimate of Rs352mn. EBITDA margin expanded by 329bps YoY and 531bps QoQ to 16.4%, while EBITDA/tonne came in at Rs666 in 1QFY18 vs. Rs450 and Rs405 in 1QFY17 and 4QFY17, respectively. The Company has posted Rs100mn net profit in 1QFY18 compared to net loss of Rs3mn and Rs32mn in 1QFY17 and 4QFY17, respectively. We continue to believe that likely improvement in operating synergies from Bayyavaram GU (Visakhapatnam) in terms of change in product-mix, saving in lead...

ICICI Securities Ltd | Retail Equity Research Sagar Cements reported a healthy set of Q1FY18 numbers. Revenues increased 31.1% YoY to | 258.8 crore mainly led by 19.3% YoY increase...

Sagar Cements (SCL) has reported a dismal performance in 4QFY17 with its standalone operating profit declining by 28% YoY to Rs177mn vs. our estimate of Rs227mn. While operating cost remained broadly under control, a steeper-than-expected decline in realizations (-11.5% QoQ) led to poor operating show. Operating cost/tonne stood at Rs3,025 (+8% YoY and -11% QoQ). EBITDA/tonne stood at Rs386 as against Rs539 and Rs465 in 4QFY16 and 3QFY17, respectively. However, consolidated EBITDA stood at Rs260mn and EBITDA/tonne came in at Rs405 as against Rs625 3QFY17. Notably, SCL mopped up ~Rs2.2bn through QIP and...

Operating performance of Sagar Cements (SCL) topped our estimates, with consolidated EBITDA rising by 8% qoq to Rs287mn. A better than expected realizations seen in its key markets viz;- South with contracting contribution of sales from outside Southern markets (21% v/s 25% in 2Q17) led to improvement in consolidated operating performance, which also defied volume de-growth of 8% qoq at 0.47mnT. Operating cost/tonne surged by ~8% qoq owing to substantial rise in freight (+10% qoq) and other expenditures (+12% qoq) on per tonne basis. EBITDA/tonne came in at Rs609 in 3QFY17 from Rs520 in 2QFY17. Higher interest and depreciation costs led to net loss of Rs5.3mn during the quarter. SCL...