Motilal Oswal has given Neutral recommendation for India Cements with a target price of Rs. 200 in its research report issued on Nov 11, 2021

Motilal Oswal’s research report on India Cements

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 absence of capex plans are the key concerns.


ICEM trades at 12.0x/9.3x FY23/FY24E EV/EBITDA. We maintain a Neutral rating and value it at 10x Sep’23E EV/EBITDA to arrive at TP of INR200. Any clarity on the company’s expansion plans remains a key monitorable for changing our view on the stock.

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