Neutral on India Cements, target price Rs 190: Motilal Oswal

Motilal Oswal has neutral call on India Cements with a target price of Rs 190. The current market price of India Cements Ltd. is Rs 177.5. Time period given by analyst is one year when India Cements price can reach defined target.
India Cements Ltd., incorporated in the year 1946, is a Small Cap company (having a market cap of Rs 5497.58 Crore) operating in Cement sector.

Financials
For the quarter ended 30-06-2021, the company reported a Consolidated Total Income of Rs 1048.38 Crore, down -29.89 % from last quarter Total Income of Rs 1495.30 Crore and up 35.82 % from last year same quarter Total Income of Rs 771.88 Crore. Company reported net profit after tax of Rs 46.63 Crore in latest quarter.

Investment Rationale
The brokerage expects ICEM’s market share loss in South to continue as key competitor Ramco’s new capacities get commissioned within six months. The brokerage expects net debt to decline further as the company continues to delay its capex plans. Net debt declined 15% YoY to INR30.0b in FY21. ICEM trades at 10.3x FY23E EV/EBITDA and USD72/t EV/capacity. It values the stock at 10x Sep’23 EV/EBITDA to arrive at TP of INR190.


Promoter/FII Holdings
Promoters held 28.4 per cent stake in the company as of June 30, 2021, while FIIs held 13.3 per cent, DIIs 7.6 per cent and public and others 50.7 per cent.