India Cements - Non-Core Asset Sale, A Sentimental Positive: ICICI Securities

ICICI Securities Report

India Cements Ltd. is ‘walking-the-talk’ regarding the sale of its non-core assets.

In a second such transaction, India Cements has agreed to sell its surplus land in Andhra Pradesh (near Vizag) for Rs 700 million to industry-leader UltraTech Cement Ltd.

In October 2022, India Cements sold its entire stake in subsidiary Springway Mining Pvt. Ltd. to JSW Cement Ltd. for Rs 4.77 billion.

While the move is certainly a step in the right direction, we believe India Cements will need to make significant progress in the non-core asset sale to reduce its debt of ~Rs 29 billion (as of FY23).

Factoring in the unrelenting concerns of high debt (net debt/Ebitda pegged at more than five times for FY24E) and low return on equities (due to weak cement prices in south India), we maintain 'Sell' on India Cements with a target price of Rs 122 (valued at nine times FY25E enterprise value/Ebitda).

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