ICICI Direct Assigned "Buy" On Small Cap Cement Stock, Sees 36% Potential Upside

ICICI Direct, a leading broking firm, has come up with a "Buy" rating on Sagar Cements Ltd. The brokerage has assigned a "Buy" on the stock with a target price of Rs 250 apiece. It Sees a potential upside of up to 36% from its current level. It is a small-cap stock that operates in the Cement sector having a market capitalisation of Rs 2,418.09 crore.

Sagar Cements - Stock Outlook & Performance

The shares of Sagar Cements currently trading at Rs 185 apiece, up 2.07% as compared to the previous close of Rs 181.25 apiece. Today, it opened at Rs 181.55 apiece. According to NS, its 52 week high is rs 275 apiece as on 28 March 2022 and 52 week low is Rs 154 apiece as on 21 June 2022. It has delivered negative returns over the past 1 year, around 27.88%. In the past 1 week, it has given 8.3% negative return, 10.39% in 1 month and 19.34% in 3 months, respectively. However, it has given 205.13% positive return in 3 years and 0.22% in 5 years, respectively.

Buy Stock For A Target Price of Rs 250 apiece

ICICI Securities said, "With the recent price correction, Sagar Cement is trading at attractive valuations (US$50/t vs. replacement cost of US$110/t). We believe Sagar Cement is an attractive regional play in the southern cement markets and has demonstrated the ability to be one of the lowest cost producers. We upgrade the stock from HOLD to BUY owing to the recent price correction and maintain our previous target price. We value Sagar at Rs 250 i.e. 8x FY25E EV/EBITDA."

About - Sagar Cements Ltd.

Sagar Cements is a south based cement player with cement capacity of 10.1 MT (including Andhra Cements). Region wise, AP/Telangana accounted for ~60% of sales followed by Tamil Nadu (16%), Karnataka (9%). Going forward, the company will be able to develop a presence in the fast-growing eastern market and the more profitable central market with the recent commissioning of the new 2.5 MT capacity. Captive power (61.5 MW) and grinding units near market give it cost advantage.

Disclaimer

The stock has been picked from the brokerage report of ICICI Direct. Greynium Information Technologies, the Author, and the respective Brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to consult with certified experts before making any investment decision.