India Cements  — Motilal Oswal Maintains 'Sell' On The Stock After Q3 Results Here's Why

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Motilal Oswal Report

The India Cements Ltd. reported an operating loss of Rs 1.9 billion (versus estimated loss of Rs 854 million) in Q3 FY25. Sales volume increased ~5% YoY to 2.1 million tonne (~2% below our estimate), while blended realization declined ~20% YoY to Rs 4,333 (~5% below our estimate). India Cements' adjusted net loss stood at Rs 2.6 billion (estimated loss of Rs 1.4 billion) versus a net loss of Rs 345 million in Q3 FY24.

The company’s capacity utilization stood at 57% in Q3 FY25 versus 50%/59% in Q3 FY24/Q2 FY25. However, a sharp decline in realization led to a higher operating loss. UltraTech Cement has acquired a 32.7% stake in India Cements, taking its aggregate shareholding in the company to 55.5%. India Cements has now become a subsidiary of UltraTech Cement.

The company is estimated to benefit from synergy with UltraTech, led by the introduction of new system and processes, economies of scale, cost optimization initiatives and a wider distribution network. India Cements aims to strengthen its presence in its core markets (South).

We await clarity from the management regarding the transition/integration process of India Cements under the new management, profitability and growth plans. We value India Cements at a replacement cost (enterprise value/tonne of $100) and arrive at our target price of Rs 310. Maintain Sell.

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