India Cements Ltd. share price target

India Cements (ICEM), following the recent change in management (the first quarter after UTCEM took control), has reported an improved performance in 4QFY25. It has reported an EBITDA of INR5m (vs. an estimate of an operating loss of INR1.2b) in 4QFY25.

India Cements (ICEM) reported an operating loss of INR1.9b (vs. estimated loss of INR854m) in 3QFY25. Sales volume increased ~5% YoY to 2.1mt (~2% below our estimate), while blended realization declined ~20% YoY to INR4,333 (~5% below our estimate).

India Cements (ICEM) is ‘walking-the-talk’ regarding the sale of its non-core assets. In a second such transaction, ICEM has agreed to sell its surplus land in Andhra Pradesh (near Vizag) for INR 700mn to industry-leader UltraTech Cement (UTCEM). In Oct’22, ICEM sold its entire stake in subsidiary Springway Mining Pvt Ltd (SMPL) to JSW Cement for INR 4.77bn.

Profitability continued to drag its feet at India Cements (ICEM) even as EBITDA for Q1FY24 turned positive (albeit a mere INR 50mn). Performance continues to be impacted by: a) poor volume growth (flat YoY), b) weak realisations (down ~1% QoQ), and c) high operating cost – leaving little on the table for the company.

India Cements (ICEM) has posted an EBITDA loss for the third consecutive quarter. EBITDA loss in Q4FY23 stood at Rs445mn vs a loss of Rs695 in Q3FY23 and a profit of Rs615mn in Q4FY22. While volumes rose ~5% YoY, weak cement prices and elevated fuel cost got the better of ICEM.

Pricing power is crucial in the commodity business and the Indian cement sector is certainly losing the plot on that front. Elevated competitive intensity across regions, has prevented margin-accretive price hikes, despite: a) robust demand (Q4FY23E prices slipped ~1% QoQ notwithstanding peak season volume surge of ~10% YoY)

India Cements’ (ICEM) Q3FY23 EBITDA loss at Rs66mn (down 160% YoY) was higher than our estimates (consensus expected EBITDA profit) as the company was unable to pass on the elevated cost pressures.

India Cements’ (ICEM) Q2FY23 EBITDA at Rs0.9bn (down 164% YoY) was way below our / consensus estimates due to hit from higher input costs.

India Cements’ (ICEM) Q1FY23 EBITDA at Rs0.4bn (down 77% YoY) was below our / consensus estimates due to hit from higher input costs.

India Cements (ICEM)'s 2QFY22 result was in line with our estimates, although earnings were under pressure due to higher costs. The lower base of last year aided volume growth of 12% YoY; this was offset by a 13% YoY increase in opex/t, leading to a 49.2% YoY drop in blended EBITDA/t. We maintain our FY23E/FY24E estimates and Neutral rating on the stock as valuations at 12x/9.3x FY23/FY24E EV/EBITDA appear expensive. Higher volatility in earnings due to the demand-supply mismatch in the South region and higher leverage (net debt/EBITDA at 4.5x/3.6x FY22/FY23E) in the...

India Cements (ICEM)'s 4QFY21 EBITDA came in 4% below estimate due to higher costs. This was partly attributable to higher selling in the faraway markets of East and Central, which offset weaker demand in South the company's core market. Capacity utilization stood at just 57% in FY21. Net debt declined 15% YoY to INR30.0b in FY21 as the company repaid INR5.3b worth of debt on strong OCF and negligible capex. We raise our FY22E/FY23E EPS by 5%/17%, factoring in lower interest costs from deleveraging as the company continues to delay its capex plans. It...

India Cements (ICEM)'s 3QFY21 EBITDA was 10% below estimate, weighed by a weaker sales mix. This is attributable to higher selling in non-trade and faraway markets in the East and Central regions of India to offset weak demand in its core market in South. We reduce our FY21/FY22E EPS by 14%/7% as the company has guided for the continuation of this strategy to support utilization which would lower average realization and increase freight cost. Maintain Neutral....

India Cements (ICEM)'s 2QFY21 results highlight the benefit of high cement prices in South India, which led to the highest EBITDA/t since FY14 at INR1,114/t (+102% YoY). Volumes, however, declined 21% YoY due to weak cement demand in South India and market share loss. We raise our FY21/FY22E EPS by 28%/2%, factoring in a strong realization outlook on the back of a strong production discipline in South. However, we retain our Neutral rating on expected market share loss and a valuation of 9.4x FY22E EV/EBITDA, pricing in strong margins....

24 June 2020 India Cement (ICEM)s 4QFY20 results highlight the continued loss in market share, with volumes down 20% YoY v/s market decline of ~10% YoY. We note that ICEM has reported the lowest EBITDA in close to a decade. We lower our FY21/FY22 estimates to factor weaker volume trends. Following sharp appreciation in the past six months, we find the stock fairly valued at 9.3x FY22 EV/EBITDA and USD60/t of capacity, and rating. due to the impact of COVID-19 and market share loss. Blended realization declined 3% QoQ (7% YoY) to INR4,352/t. Thus, net sales fell 26% YoY to was primarily due to lower realization and higher freight costs. As a result, EBITDA was down 65% (48% QoQ) to INR675m (65% lower than estimated). The EBITDA margin shrank 6.4pp YoY and 4.9pp QoQ to 5.9%. Notably, the company reported the lowest ever EBITDA in close to a The company reported an exceptional expense of INR1.

8 February 2020 India Cements (ICEM) 3QFY20 results highlight the demand slowdown in South India. Overall, volumes declined 10% YoY with pricing down 4% QoQ on demand weakness while EBIDTA/t reduced 12% QoQ led by lower realizations. We maintain our FY20/FY21E estimates and that demand revival in the South and subsequent pricing improvement will remain the key monitorables. Volumes declined 10% YoY to 2.66mt in 3QFY20. Blended realizations declined 4% QoQ to INR4,478/t due to weak prices in the South. Thus, net sales declined 10% YoY to INR11.9b (v/s est. EBITDA/t came in at INR484/t (in-line). However, given the lower volumes, EBITDA was down 5% YoY to INR1.3b (5% lower than est.).

11 November 2019 declined 13% YoY to 2.67mt; blended realizations declined 3% QoQ to INR4,671/t due to weaker prices in the southern markets. Thus, net sales declined 10% YoY to INR12.5b (v/s est. EBITA/t came in at INR552 (higher than est. However, given the weaker volumes, EBITDA was down 5% YoY to INR1.5b (in-line). Margins expanded 0.65pp YoY to 11.8%, while PAT increased 6x YoY to INR87m (v/s est.

Healthy Performance on Firm Realisation; Maintain HOLD India Cements (ICEM) has reported a healthy operating performance in 1QFY20 with EBITDA growing by 55% YoY and 26% QoQ to Rs2.4bn vs. our estimate of Rs2.1bn. Cement EBITDA/tonne stood at Rs752 as against Rs489 in 1QFY19 and Rs552 in 4QFY19, respectively. While average cement realisation increased by 8.6% YoY and 4% QoQ to Rs4685/tonne, sales volume de-grew marginally by 1% to 3.04mnT. Notably, cement operating cost/tonne marginally declined by 0.4% QoQ to Rs3,932 mainly led by lower input cost. A consistent increase in higher non-trade sales and tight liquidity conditions especially in the Southern states resulted in further working capital...