At a Glance
After 3 years of being literally offline, Andhra Cements restarted operations in April 2023. New promoter? Yes. Production resumed? Partially. Profits? LOL. This stock is a cement zombie with a ₹600 Cr market cap and no earnings. But hey—everyone loves a comeback story. Or at least, a speculative bet.
1. 🥁 The Hook: From Cement to Sentiment
Remember when your school canteen shut down for renovations and reopened with the same soggy samosas?
That’s Andhra Cements.
- They shut down both plants in Feb 2020
- No production for 3 years
- In April 2023, re-commissioned the Sri Durga Cement Works in Guntur
- Meanwhile, the other unit (Visaka Cement Works) is still in limbo due to city zone restrictions
Yet, the stock touched ₹104 in 2023, up from ₹25 lows—a 4-bagger for people who bought dead hopes and sold dreams.
2. 🏭 WTF Do They Even Do?
Andhra Cements is in the business of cement manufacturing. At least on paper.
Here’s the two-plant setup:
- Sri Durga Cement Works (SDCW) – Resumed production
- Visaka Cement Works (VCW) – Still shut
But production ≠ profits.
This isn’t UltraTech with pan-India presence or Ambuja with mega margins. Andhra Cement is a single-digit market share regional operator, recently revived through Insolvency resolution under the IBC.
Spoiler: The new owner is Sagar Cements Ltd, a seasoned south India player.
3. 📉 Financials: LOL Worthy or Just Sad?
Snapshot (FY25):
| Metric | Value |
|---|---|
| Sales | ₹274 Cr |
| Net Profit | –₹152 Cr |
| OPM | –11% |
| ROCE | –11% |
| ROE | –68% |
| EPS | –₹16.50 |
- In FY24, company reported some revenue (₹268 Cr) after 3 years of ZERO.
- OPMs are still negative even after restart
- Net losses are widening again, from –₹66 Cr (FY24) to –₹152 Cr (FY25)
🔥 Highlight: A one-time other income of ₹972 Cr in FY23 due to write-offs helped book fake accounting profit. Ignore that—it’s not operational.
4. 💸 Valuation: Is It Cheap, Meh, or Crack?
Let’s break this down.
- Market Cap: ₹618 Cr
- Book Value: ₹15.7/share
- CMP: ₹67 ⇒ P/B = 4.27x 🤯
- P/E: NA (because… there’s no E)
For a company with:
- No profits
- Debt of ₹750 Cr
- Negative operating margins
- Promoter pledging of 26.4%
…the valuation is “Cement ka Bubblegum.”
This is not investing, this is pure IBC-fuelled hopium.
5. 🔥 What’s Cooking – Triggers & Drama
✅ IBC Resolution Completed:
Sagar Cements took over in FY23 and began revival. That’s a legit step.
✅ Plant Restarted (Guntur) in April 2023
So now there’s actual production, sales, and cost structures being rebuilt.
❌ Still Negative Margins:
Even with the plant running, OPM is –11%. No pricing power, high raw material costs, and logistics drag.
❌ City-Limit Problems at Visaka Unit:
Regulatory issues mean one plant is basically abandoned. No income, only depreciation.
❗️ Share Price Movement:
From ₹25 in 2022 → ₹104 in 2023 → now ₹67
So traders are definitely watching this for breakout/breakdown trades.
6. 🏦 Balance Sheet: How Much Debt, How Many Dreams?
| Item | FY25 |
|---|---|
| Total Equity | ₹92 Cr |
| Reserves | ₹52 Cr |
| Debt | ₹757 Cr |
| Networth | ₹144 Cr |
| Net D/E | 5.2x (approx) |
- The company was basically a debt-ridden corpse before revival
- Despite a one-time accounting gain in FY23, debt is still massive
- Working capital cycle is erratic. Example: Inventory Days = 1,019 days 🤯
7. 💵 Cash Flow – Sab Number Game Hai
FY25:
| Metric | Value |
|---|---|
| CFO (Cash from Ops) | ₹60 Cr |
| CFI (Investing) | –₹81 Cr |
| CFF (Financing) | ₹11 Cr |
| Net Cash Flow | –₹11 Cr |
So despite operational revival, cash flow is shaky. Cement is capex-heavy, and without economies of scale, margins remain fragile.
8. 📊 Ratios: Sexy or Stressy?
All stress, no sexy.
| Ratio | FY25 |
|---|---|
| ROE | –68.4% |
| ROCE | –10.5% |
| OPM | –11% |
| EPS | –₹16.50 |
| Interest Cover | < 1 |
Even after resolution, interest burden, depreciation, and scale inefficiencies are weighing this down.
9. 🧾 P&L Breakdown – Show Me the Money
Let’s zoom into FY25:
- Sales: ₹274 Cr
- COGS/Expenses: ₹303 Cr
- Operating Loss: ₹29 Cr
- Other Income: ₹1 Cr
- Interest + Depreciation: ₹147 Cr
- Net Loss: ₹152 Cr
So yes, they are producing cement.
They just aren’t making money from it.
10. 🥊 Peer Comparison
| Company | ROCE (%) | OPM (%) | P/E | CMP/BV | EPS | Market Cap |
|---|---|---|---|---|---|---|
| UltraTech | 10.9 | 16.5 | 59.7 | 5.2 | ₹197 | ₹3.6 L Cr |
| Ambuja | 10.5 | 17.0 | 35.0 | 2.7 | ₹12.5 | ₹1.4 L Cr |
| JK Cement | 14.0 | 17.1 | 61.7 | 8.0 | ₹114 | ₹49,000 Cr |
| Andhra | –10.5 | –11% | NA | 4.3 | –₹16.5 | ₹618 Cr |
Let’s be honest—this stock isn’t competing with cement majors. It’s competing with penny stock attention spans.
11. 👥 Shareholding – Who Still Believes?
As of Mar 2025:
- Promoters: 90% (Sagar Cements)
- Public: 9.65%
- FIIs/DIIs: 0.34%
- Pledging: 26.4%
So yes, it’s now promoter-controlled. But they’re also pledging stock, which = red flag unless clarified.
Number of shareholders has dropped from ~99K to 91K over 3 years = Retail fatigue.
12. 🧠 EduInvesting Verdict™
Andhra Cements is like that student who failed all exams, got a management quota seat, and now hopes to clear UPSC.
Can the stock turn around? Technically yes. But…
- It’s not profitable
- Debt is huge
- One plant still shut
- Margins still red
- Valuation is overcooked
So while cement demand might rise, Andhra’s stock needs more than hope and dust.
🎯 Fair Value Estimate
Let’s apply a basic EV/Sales multiple method:
- Trailing Sales: ₹274 Cr
- Assume stable cement biz gets 1.5x EV/Sales ⇒ EV = ₹411 Cr
- Debt = ₹757 Cr
- Implied Equity Value = Negative (LOL)
- But market is irrational, so let’s be generous:
🎯 FV Range = ₹25–₹35 per share
Anything beyond that is speculation premium, not fundamentals.
✍️ Written by Prashant | 📅 July 3, 2025
Tags: Andhra Cements, Sagar Cements, Cement Sector, Penny Stocks, IBC Revival, Guntur Plant, Cement Stocks, Cement Manufacturing India, Andhra Pradesh Industry, EduInvesting
