Motilal Oswal recommended Neutral rating on India Cement with a target price of Rs 120 in its research report dated June 24, 2020.
Motilal Oswal 's research report on India Cement
India Cement (ICEM)'s 4QFY20 results highlight the continued loss in market share, with volumes down 20% YoY v/s market decline of ~10% YoY. We note that ICEM has reported the lowest EBITDA in close to a decade. We lower our FY21/FY22 estimates to factor weaker volume trends. Following sharp appreciation in the past six months, we find the stock fairly valued at 9.3x FY22 EV/EBITDA and USD60/t of capacity, and maintain our Neutral rating. Any potential change of ownership and management control is the key monitorable.
Outlook
ICEM trades at 14.5x/9.5x FY21/FY22E EV/EBITDA and at USD64/t / USD63/t FY21/FY22E capacity. We value the stock at 9x FY22E EV/EBITDA to arrive at a target price of INR120. Maintain Neutral.
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