India Cements Q3 Results Review - Weak Volume, Higher Cost Led Earnings Miss: Motilal Oswal

Motilal Oswal Report

India Cements Ltd.'s reported Ebitda of Rs 490 million (versus estimated Rs 895 million) in Q3 FY24. Sales volume declined ~9% YoY (15% miss) to 2 million tonne. Its blended Ebitda/tonne stood at Rs 247 (versus estimated Rs 383). Adjusted net loss stood at Rs 345 million (versus estimated Rs 130 million net loss).

Management highlighted that cement prices have improved in Q3, which led to better NPR for the company. However, sales volume was adversely impacted due to working capital crunch.

The company continues to focus on lowering variable cost and improving NPR. During the quarter, India Cements successfully sold a ship for a profit of Rs 262 million (shown as exceptional) and in January 2024, it acquired a new ship.

We cut our FY24E earnings (Ebitda cut ~20%), considering lower-than expected volume and profitability;

however, we reiterate our FY25/FY26 estimates. We reiterate our 'Sell' rating on the stock with a target price of Rs 185 (premised on 11 times FY26E enterprise value/Ebitda).

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