Target: ₹265

CMP: ₹242.75

We visited the integrated unit (IU) of Andhra Cements (ACL) at Dachepalli, in the Palnadu district of Andhra Pradesh. Sagar Cements (SGC) owns 90 per cent stake in its subsidiary Andhra Cements, which it had acquired through NCLT in 2023.

Under SGC, Andhra Cements’ capacity enhancement, refurbishment, and cost reduction programmes are progressing well, and are expected to turn around its profitability. Further, ACL is also working on a rights issue for FY26, which will both reduce SGC’s stake to 75 per cent and infuse additional equity in the company, supporting the balance sheet. ACL will monetise the Vizag plant land gradually over the next few years, once it receives the requisite approvals in FY26.

We maintain Add on Sagar Cements with an unchanged TP of ₹265/share (valued at an average of 6.5x FY27E EBITDA and FY27E EV/MT of $70/MT). The recent rebound in cement prices across the southern region, and ongoing revamp in ACL operations should drive up SGC’s consolidated EBITDA margin to ₹560/MT over FY26-27E. We also expect SGC’s net debt to EBITDA to cool off to 3.6x in Mar-27E, from 9x in Mar-25.

Published on June 25, 2025