Price revival brings little cheer for India Cements

Punished for the dismal performance on margins and realizations in the December quarter, the stock hit a 52-week low of ?74.75. Although cement prices in south India were recently raised by ?30-35 per 50kg bag, analysts are sceptical about these steep price hikes persisting. Even if they do, India Cements’ ballooning debt due to capacity expansions, is feared to counter the positives of better realizations. At the end of the December quarter, gross debt was ?3,540 crore, up from ?3,100 crore in the year-ago period, the management told analysts in a post-earnings conference call. It should be noted that India Cements has been a case of swollen debt for some time now. What is turning analysts off is the fact that no major steps have been taken to clean the balance sheet. On the contrary, chances of further stretching are highly likely.