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Motilal Oswal Report
Plans for efficiency improvement measures
India Cements (ICEM) posted an operating loss of INR445m in 4QFY23 (v/s our estimate of INR634m operating loss) led by higher-than-estimated volumes. Net loss (adjusted for exceptional item) stood at INR1.2b (v/s our estimate of INR1.4b net loss) during the quarter.
ICEM is engaging experts (FLSmidth and Polysius) for refurbishment and replacement of some equipment to reduce heat consumption and improve efficiency at three-to-four plants. An estimated capex of INR6b would be incurred by the management over FY24-25. It identified land parcels (400- 500 acre) to be monetized (estimated value of INR12-13b), which are not used in the cement business. The proceeds will be used for the capex needs.
We maintain our FY24E/FY25E earnings for ICEM. We value the stock at 10x FY25E EV/EBITDA (v/s Sep’24E earlier) to arrive at our TP of INR155. Reiterate Sell.
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