India Cements, also known as ICEM, has experienced significant changes in recent years. From being a key player in mergers and acquisitions to dealing with the sale of stakes by its new promoter, UltraTech Cement, the company is now focusing on its core operations.
UltraTech Cement is taking notable steps to improve the efficiency of India Cements. The plans include increasing the use of green power from 5% to 80% and upgrading kilns. These moves are expected to have a positive impact on the company's financial performance, with estimated EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) of over INR 1,000 per ton by FY28, compared to INR 334 in Q2FY26.
Despite these improvements, the Indian cement market is becoming increasingly competitive. As a result, the company's return on equity (RoE) in FY28 may be affected. To evaluate India Cements' value, we consider its EV/EBITDA ratio, which is a measure of a company's overall performance. Based on this, we estimate the company's value at 12x FY28E EV/EBITDA.
We have initiated coverage of India Cements with a HOLD rating and a target price of INR 422. Although a potential merger with UltraTech Cement seems likely, the timing and terms of such a deal remain uncertain. As always, it's essential to consult with certified investment experts before making any decisions.
Download the TradeKaizen app to practice F&O trading with real-time market data anytime, anywhere.
Get it on Google PlayConnect with fellow traders, share strategies, and improve your trading skills in our Telegram group.
Join Telegram