In Q4 FY25, demand picked up with a rebound in construction sector, real estate growth, and higher government spending. For FY25, demand in the South remained flat YoY with +5% growth in Karnataka market, flat to 2%/2.5%/5% degrowth for AP and Telangana/Kerela/Tamil Nadu. For FY26E, South industry demand is expected to grow by 6-8%, and the company intends to grow in line with the industry. Sagar Cements targets volume of 6-6.1 mt (vs earlier 6.4-6.5 mt) in FY26E.
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Dolat Capital Report
Sagar Cements Ltd.'s Q4 FY25 revenue, volume, realization/tonne came in line with our estimates, however, Ebitda, Ebitda/tn were below estimates, and net loss was higher than estimates.
We expect revenue/Ebitda CAGR 15.9%/93.0% over FY25-27E led by 8.3%/13.7% volume growth and +9.2%/-0.1% realization growth in FY26E/FY27E. We also expect improvement in adjusted profit after tax to Rs 708 million versus net loss of Rs 1.8 billion in FY25.
We increase our FY26E/FY27E Ebitda estimates by 35.6%/29.1% post factoring higher realization and expect Ebitda/tn of Rs 691/Rs 754 for the same period vs. Rs249 for FY25.
Accordingly, we increase our multiple from 7x to 7.5x and upgrade rating to ‘Reduce' from Sell with revised target price of Rs 231 based on 7.5x consolidated FY27E EV/Ebitda.
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