Sagar Cements Q2 Results Review - Lower Profitability Remains A Concern: Dolat Capital

Dolat Capital Report

Sagar Cements Ltd.’s Q2 FY25 revenue came in line, but realization, Ebitda, Ebitda/tonne were above estimates and volume / net loss was below estimates.

We expect revenue/Ebitda CAGR 7.4%/23.2% over FY24-27E led by 0.7%/14.6%/14.1% volume growth and -7.6%/+1.9%/-0.1% realization growth in FY25E/FY26E/FY27E. However, we expect improvement in adjusted profit after tax at Rs 76 million in FY27E versus Rs 837 million net loss in FY24.

We decrease our FY25E/FY26E Ebitda estimates by -24.7%/-17.1% post factoring lower volume coupled with lower realization and expect Ebitda/tonne of Rs 395/Rs 571 for the same period; we have also introduced FY27E with Ebitda/ tonne of Rs 621. Maintain ‘Sell’ rating with revised target price of Rs 192 based on 7.0 times consolidated FY27E EV/Ebitda + Vizag land monetization at Rs 49/share (Rs 6.4 billion).

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