India Cements has raised Rs2.96 billion ($65 million) through issue of 24.6 million shares at an average price of Rs120.2 per share.
Proceeds are primarily to be utilized for capex, working capital requirements and repayment of existing loans. Cement prices have been hiked in Andhra Pradesh due to power cuts and prevailing prices now stand between Rs 185-190 per bag. Dealer checks indicate that prices have been hiked by Rs10-20 per bag depending upon region.
We fine tune our estimates to factor in price hikes, lower interest outgo as well as higher equity capital Stock is likely to outperform in the near term due to price hike announcements. However, concerns exist in the long term regarding sustainability of these price hikes. We continue to maintain REDUCE on the stock with a revised price target of Rs115 on FY11 estimates.
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