ICICI Direct has given Hold recommendation for Sagar Cement with a target price of Rs. 205 in its research report issued on Oct 21, 2022
ICICI Direct’s research report on Sagar Cement
Sagar Cement is a south based cement player with cement capacity of 8.25 MT. Region wise, Andhra Pradesh/Telangana accounted for ~60% of sales followed by Tamil Nadu (16%), Karnataka (9%). Going forward, the company will be developing a presence in the faster-growing eastern and central market with recent commissioning of new 2.5 MT capacity • Self-reliance in power (61.5 MW), ability to switch between coal and petcoke for fuel requirement and split grinding units near market give it a cost advantage.
Outlook
However, a rise in debt for potential M&A is expected to pose a challenge in the medium-term. Hence, we maintain HOLD rating on the stock. We value Sagar at Rs 205 i.e.8x FY24E EV/EBITDA.