India Cements - Higher realizations help beat estimates :Emkay

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India Cements

Higher realizations help beat estimates

UNDER REVIEW

CMP: Rs72                                        Target Price: Under Review

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n     APAT at Rs1.05 bn – above est due to higher cement prices & lower tax outgo. Southern markets held on to elevated price levels-avg realizations at Rs4143/t (vs est of Rs3922/t)

n     Higher prices drive EBITDA/t to Rs982, EBITDA + 142% yoy to Rs2.42 bn – above est. Impact of domestic coal price hike captured during the quarter  

n     Though prices remained firm in south in 1Q, expect sluggish cement demand to put pressure on prices. Another unrelated diversification into capital intensive infra space creates uncertainty, even while B/S saddled with debt  of Rs27 bn 

n     Though ICEM’s valuation at EV/ton of USD55 are attractive, unrelated diversification has surprised us & gives no clarity on use of cash flows-Awaiting more clarity on possible new infra venture- Rating & TP under review