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Nirmal Bang Report
The key metrics reported by Sagar Cements Ltd. were higher than our estimates – Volume (actual/estimate: 1.41 million tonne/1.37 mt), Realisation/tonne (actual/estimate: Rs 4,757/Rs4,471) and Ebitda/tonne (actual/estimate: Rs 619/Rs 596).
We maintain our 'Accumulate' rating on Sagar Cements as the management has reduced its volume guidance for FY24 from 6.2 mt earlier to 5.6 mt citing the upcoming Lok Sabha elections and state elections in Andhra Pradesh.
Ebitda guidance for FY24 has been scaled down to Rs 3,122 million. FY25 volume guidance stands at 7 mt with Andhra Cement sales pegged at 0.9-1.0 mt.
We value Sagar Cements at nine times December-25E enterprise value/Ebitda with a revised target price of Rs 299.
Key risks include: Price rollbacks, competition in core markets and higher sales in the non-trade segment.
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