India Cements Shares In Focus: ICICI Securities Re-Initiates Coverage With 'Hold' Rating

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ICICI Securities Report

ICICI Securities has re-initiated coverage on India Cements Ltd. with a 'Hold' rating and a target price of Rs 422, implying a modest 1.8% upside from the current market price of Rs 414.

The brokerage notes that while India Cement is set for a significant operational overhaul under UltraTech Cement Ltd., the gains may only restore parity with South India’s leading players rather than deliver outsized returns.

Little upside on fundamentals; merger uncertainty looms

The coveted Ebitda/tonne of more than Rs 1,000 would only bring India Cements back into the main league; yet, merely yielding a mid-single-digit RoE.

Envisaging fresh concerns of rising industry-wide competitive intensity (tracking significant capacity additions over FY26–28), the brokerage values India Cements at 12 times FY28E enterprise value/Ebitda – just shy of brokerage's 13 times multiple for The Ramco Cements..

As per UltraTech Cement, while a merger is likely on the cards in FY27 or FY28; this remains imponderable given vagaries around its timeline and the merger ratio (usually advised by an independent valuer), in the brokerage's view.

Key risks

• Sharp increase in cement prices and/or sharp fuel cost decline are key upside risks.

• Sharp fall in cement prices and/or major surge in fuel prices are key downside risks.

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