Result Update: The India Cements Ltd - BUY - TP Rs.195 - Kotak

Revenues for the quarter were in line with our expectations led by healthy volume growth. Demand in the southern region remained weak due to sand unavailability but construction activity is beginning to revive in TN and growing in full swing in AP/Telangana. Cost pressures remained high due to higher power and fuel but company would continue to adopt cost rationalization measures going forward. Net profit came ahead of our estimates.

Along with this, with upcoming election schedule in AP/Telangana, we expect cement demand to report strong growth with government's push for infrastructure development. We believe that India Cements is adequately positioned to cater to upcoming demand with incremental volumes. We tweak our estimates downwards to factor in lower realizations and higher costs and also introduce FY20 estimates. We roll forward our valuations on FY20 and arrive at a revised price target of Rs 195 (as against Rs 223 earlier) based on average of 8x EV/EBITDA and $80 per tonne on FY20 estimates. Maintain BUY.

Shares of INDIA CEMENTS LTD. was last trading in BSE at Rs.158.9 as compared to the previous close of Rs. 159.65. The total number of shares traded during the day was 166551 in over 1728 trades.

The stock hit an intraday high of Rs. 161.9 and intraday low of 157.05. The net turnover during the day was Rs. 26557894.

Source : Equity Bulls

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