India Cements surges 9% as RK Damani & family increases stake to 22.76%

Shares of India Cements surged 9 per cent to Rs 192.35 on the BSE in Wednesday’s intra-day trade after billionaire investor Radhakishan S Damani (RK Damani), Gopikishan Shivkishan Damani & family increased their stake in the company to 22.76 per cent at the end of December 20, 2021, according to disclosure made by the company to the stock exchanges.

Since March 30, 2020, they have acquired an additional 6.30 million equity shares or 2.03 per cent stake in India Cements via open market purchases, the company said.

Meanwhile, as on September 30, 2021, RK Damani (11.34 per cent), Gopikishan Shivkishan Damani (8.46 per cent) and RK Damani & Gopikishan Shivkishan Damani (1.34 per cent) collectively held 21.14 per cent stake in India Cements, as per the shareholding pattern data.

Despite today's run-up, the company's stock has underperformed the market by falling 4 per cent, as compared to 3 per cent decline in the S&P BSE Sensex in the past one month. In the last six months, it declined 5 per cent, as against 8 per cent rise in the benchmark index.

For July-September quarter (Q2FY22), India Cements had reported a soft operating performance, mainly led by the sharp increase in input costs and weak realizations. EBITDA declined by 43 per cent on year and 18 per cent sequentially to Rs 134 crore. Blended EBITDA/tonne softened to Rs 566 vs. Rs 1,114 in Q2FY21 and Rs 833 in Q1FY22.

The loss of volumes in the core markets, together with the increase in the price of coal and dilution of selling prices, resulted in the EBIDTA margin coming down during the September quarter. The company's on-going efforts in controlling the fixed cost, administrative overheads, marketing overheads and contract labour continued during the quarter under review, India Cements said while announcing Q2 results on November 11, 2021.

Cement demand is expected to remain on track with the Centre and states giving push to infrastructure spending and affordable housing. At the same time, the risk of cost pressures is staring at the industry due to high fuels and petcoke costs and constraints in the availability of coal. All these factors are expected to put pressure on output and earnings margins in the coming months, the company had said.

'"While an improvement in capacity utilization on a sequential basis aided it to improve its unitary freight, employees and other expenditures on better operating leverage, a sharp increase in input costs weighed on the company's overall performance," an analyst at Reliance Securities had said in Q2 result update.

Notably, the planned capacity expansion in the Central region is still not in sight and the company will have to choose either to accord priority to plant upgradation or capacity addition. Thus, we found no reason to raise the target multiple, the analyst said.

At 10:09 am; India Cements was trading 5 per cent higher at Rs 185.85 on the BSE, as compared to 0.62 per cent decline in the S&P BSE Sensex. Trading volumes on the counter jumped an over three-fold with a combined 9.18 million equity shares having changed hands on the NSE and BSE. The stock had hit a 52-week high of Rs 232.05 on November 10, 2021.