Sagar Cements Ltd. share price target

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...

Operating performance of Sagar Cements (SCL) marginally topped our estimates, with consolidated EBITDA rising by 3% qoq to Rs266mn vs. our estimate of Rs251mn. Higher sales from rich realizations pockets outside AP/Telangana, which contributed 63% to total sales with utilizations uptick from BMM (70% vs. 62% in 1QFY17) led to improvement in consolidated operating performance defying volume de-growth of 11% qoq at 0.51mnT. Operating cost/tonne surged by ~6% qoq owing to substantial rise (+23% qoq) in power and fuel cost/tonne (led by rise in imported coal prices) and 31% jump in freight cost/tonne triggered by increased lead distance and higher diesel price....

Buy Sagar Cements Ltd CMP at Rs. 619 and add on Dips to Rs. 545 - 565 for the Sequential Targets of Rs. Rs. 726-864

We recommend to BUY Sagar Cements for a target of INR500 - 6.25XFY17 EV/EBITDA (21% upside) Perfectly positioned to Tap demand growth: SCL with presence...