India Cements Ltd. share price target

India Cement reported a mixed set of Q4FY19 numbers with topline, volumes beating our estimates but missing estimates on the profitability front. Revenues grew 11.9% YoY to | 1564 crore led by 7.8% YoY growth in volumes to 3.33 MT (vs. I-direct estimate of 3.15 MT). Realisations were at ~| 4,700/t, up 3.8% YoY (vs. I-direct estimate of ~ | 4,645/t). Topline includes | 20.25 crore pertaining to subsidy receivable from Rajasthan government (sanctioned to Trinetra Cement that has been merged with India Cement). EBITDA margins witnessed a 95 bps YoY expansion to 12.3% (vs....

Severe Competition in the south had its toll on the operating performanceof the company: The cement sales in the current quarter was at 13.16 Bn ascompared to 12.13 Bn in last year's quarter, registering growth of around 8.5% and the overall volume stood at 29.58 lakh tons for the quarter, as compared to 27.26 lakh tons.

11 February 2019 ICEMs volumes grew 9% YoY to 2.96mt (in-line) in 3QFY19. This, however, lagged industry growth, as sales were affected by cyclone in Tamil Nadu. Blended realizations declined 1.3% QoQ (flat YoY) to INR4,450/t (in-line). Net sales, thus, increased 8.5% YoY to INR13.16b. Cost/t increased 4% YoY, led by an increase in power & fuel cost/t. Blended EBITDA/t declined 26% YoY (-9% QoQ) to (1) Primary market of Tamil Nadu was affected by the cyclone Gaja, which devastated some districts in Nov18. (2) Prices of fuel have started easing after increasing steeply in 3QFY19, the favourable impact of which will be felt over the coming quarters. Volumes grew 13% YoY, with sales increasing 8% YoY. For 4QFY19, we expect volumes to increase 1% YoY, with sales growth of 2% YoY; EBITDA is expected to increase by 14% YoY and PAT to decline by 5% YoY.

Sales Volume driven by increase in demand and better capacity utilization: The company operated at 77% of its capacity utilization as comparedto 70% in the same quarter of the previous year.

India Cements' Q2FY19 results were operationally ahead of our estimates. However, PAT stayed below our expectations mainly on account of higher interest costs due to forex loss. Revenues increased...

India Cements (ICL) has reported a subdued set of numbers for 4QFY18. Its reported EBITDA declined by ~17% YoY and ~5% QoQ to Rs1.6bn (vs. our estimate of Rs1.7bn) owing to higher-thanestimated rise (+5.5% QoQ) in cement operating cost/tonne to Rs3,920 led by higher employee cost, Freight and Power & Fuel cost. Cement EBITDA/tonne came in at Rs499 as against Rs712 and Rs628 in 4QFY17 and 3QFY18, respectively. However, net profit stood at Rs353mn (vs. our estimate of Rs200mn) led by lower tax and interest cost. Whilst receivables declined to Rs6.3bn (vs. Rs7.9bn in 1HFY18), which aided ICL to sequentially reduce its gross debt by Rs2.3bn, on YoY basis its debt rose by Rs2bn to Rs31.3bn again reaching the peak witnessed in FY15. We believe that ICL's inability to pare down debt amid no capacity expansion may not warrant any...

Better sand availability in Tamil Nadu, higher infra spend to drive growth The recent stay order by the Supreme Court on ban on river sand mining in Tamil Nadu is expected to improve construction activity in coming quarters. The company has 38% of its capacity in Tamil Nadu. Hence, this will be a key beneficiary of the pick-up in demand. Further, apart from Tamil Nadu, a major driver of cement demand in the south market is expected to be the AP and Telangana market. These markets are expected to increase ~15.0% YoY mainly led by higher government spending by both AP, Telangana markets...

India Cements (ICL) has reported a better-than-estimated performance mainly owing to substantial reduction in staff cost and lower-than-expected freight cost. EBITDA stood at Rs1.67bn (-11% YoY and -8% QoQ) vs. our estimate of Rs1.3bn. Cement EBITDA/tonne stood at Rs628 vs. Rs694 and Rs647 in 3QFY17 and 2QFY18, respectively. ICL's operating cost/tonne (cement) dipped by 4% YoY and 5% QoQ to Rs3,715 due to lower staff cost (-17% YoY and -28% QoQ) and freight cost/tone (-6% QoQ). Sales volume stood at 2.73mnT (+0.6% YoY and +0.9% QoQ). However, average NCR dipped by 5% each in YoY and QoQ to Rs4,343/tonne. On the flip side, continuing to move northwards gross debt surged by Rs1.0bn QoQ to Rs33.6bn (Rs29.2bn...

India Cements (ICL) numbers are not directly comparable to our estimates as the company has reported sales net of GST while our estimates were including taxes. However, in absolute terms EBITDA and PAT remained in line with our estimates. Revenues decreased 3.0% YoY to |1,268.3 crore in Q2FY18 due to accounting change as previous figures are including excise while Q2FY18 number are net of GST. ICL reported a volume growth of 12.5% YoY mainly led by merger of Trishul and Trinetra cement. However, on organic basis volumes...

Margins flat QoQ: EBITDA fell 2% QoQ to INR1.85b. Margin of 14.3% was flat QoQ. Hence, blended EBITDA/ton declined INR27 QoQ to INR672, as realization decline was offset by lower other expenses. Cement EBITDA/t stood at INR647 (-INR64 QoQ). Debt levels have increased by ~INR2.5b due...