24 June 2020
4QFY20 Results Update | Sector: Cement
Equity Shares (m)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
12M Avg Val (INR M)
TP: INR120 (-5%)
Worst quarter in close to a decade
Market share recovery key to improvement
39.3 / 0.5
140 / 68
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India Cement (ICEM)’s 4QFY20 results highlight the continued loss in
market share, with volumes down 20% YoY v/s market decline of ~10%
YoY. We note that ICEM has reported the lowest EBITDA in close to a
We lower our FY21/FY22 estimates to factor weaker volume trends.
Following sharp appreciation in the past six months, we find the stock
fairly valued at 9.3x FY22 EV/EBITDA and USD60/t of capacity, and
rating. Any potential change of ownership and
management control is the key monitorable.
Volumes declined 20% YoY (flat QoQ) to 2.65mt in 4QFY20 (est.: 2.95mt)
due to the impact of COVID-19 and market share loss. Blended realization
declined 3% QoQ (7% YoY) to INR4,352/t. Thus, net sales fell 26% YoY to
INR11.5b (est.: INR13.5b).
EBITDA/t came in lower by 47% QoQ at INR254/t (est.: INR648/t). This
was primarily due to lower realization and higher freight costs. As a
result, EBITDA was down 65% (48% QoQ) to INR675m (65% lower than
estimated). The EBITDA margin shrank 6.4pp YoY and 4.9pp QoQ to 5.9%.
Notably, the company reported the lowest ever EBITDA in close to a
The company reported an exceptional expense of INR1.0b on account of
the impairment of advances given to subsidiaries.
ICEM reported net loss of INR1.1b v/s profit of INR439m in 4QFY19 (v/s
est. profit of INR358m). Adj. for impairment provision of INR1.0b, net loss
after tax stood at INR543m.
FY20 reported rev. / EBITDA / adj. PAT stood at
INR50.6b/INR5.9b/INR0.2b, down 1%/8%/69% YoY, respectively.
FY20 net debt rose by INR2.5b to INR36.1b due to a higher working
capital as collections stood lower at INR4b in Mar’20 v/s INR8b in Mar’19.
ICEM lost ~0.7mt sales in Mar’20 due to the COVID-19-led shutdown.
Andhra Pradesh and Telangana’s industry volumes declined 36% YoY in
4Q and 23% YoY in FY20. The South India market saw 11% decline in
ICEM is looking to reduce fixed costs using lesser contractual labor and
improving the sales mix in favor of PPC, which has a lower cost. It expects
the impact of fixed cost reduction to be visible from 2QFY21. On the
other hand, the benefit of lower coal and fuel prices is expected to be
realized in 3QFY21 as it currently has a higher cost inventory that would
last up to 2QFY21.
Miss on all fronts; EBITDA down 48% QoQ
Financial Snapshot (INR b)
EBITDA Margin (%)
Adj. EPS (INR)
EPS Gr. (%)
Div. Yield (%)
Shareholding pattern (%)
Highlights from management commentary
FII Includes depository receipts
Amit Murarka - Research analyst
(Amit.Murarka@motilaloswal.com) +91 22 6129 1538
Basant Joshi - Research analyst
Investors are advised to refer through important disclosures made at the last page of the Research Report.
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.
3 September 2019