In 2015, the IPL team Chennai Super Kings (CSK) was demerged from India Cements Ltd (ICL), the cement manufacturer that originally incubated it. ICL shareholders received shares in the newly formed Chennai Super Kings Cricket Ltd (CSKCL). Between 2017 and 2024, while CSK thrived, ICL stagnated. ICL’s net fixed assets remained stagnant. Its capacity utilisation and EBITDA per ton, a key profitability metric for cement companies, lagged industry benchmarks. In May 2017, ICL’s stock briefly hit Rs 221/share, a level it wouldn’t revisit for seven years, until June 2024. Then, on June 27, 2024, a major catalyst emerged: UltraTech Cement announced it had acquired a 23% stake in ICL. With a single move, India Cements transformed from a sector laggard into one of the cement industry’s most promising turnaround stories. Here’s what happened and what to expect going forward. Pre-UltraTech: What went wrong at India Cements From FY2015-24, ICL faced persistent challenges due to high production costs resulting from an aging asset base, volatile fuel prices, and financial constraints, including high debt and working capital issues. The net result was that net fixed assets remained stagnant between FY17 and FY24. Of the Rs 1,000-1,200 crore of gross additions to property, plant, and equipment (PPE) over the decade, around 60% took place between FY2020-24. However, even those efforts were reactive, modest, and skewed toward maintenance or short-term fixes, with major efficiency-focused investments only planned or initiated after FY23. How India Cements is Scripting a Turnaround The takeover of ICL by UltraTech Cement in December 2024 wasn't just a change in ownership; it was a surgical intervention. UltraTech immediately deployed a comprehensive operational and financial strategy to tackle the company’s legacy issues of high debt, low capacity utilisation, and soaring costs. The results are already visible. In the first quarter of FY26 (June 2025), ICL's EBITDA turned positive at Rs 92 crore (up from Rs -9 crore year-on-year), supported by an 11.6% surge in sales volumes. Management is hopeful that by FY28, the EBITDA/ton will exceed Rs 1,000/ton from the Rs 458/ton achieved in Q1 FY26. But what’s really driving the change post the Ultratech takeover? 1. The debt hammer: Refinancing and deleveraging UltraTech’s priority was shedding high-cost debt. Using UltraTech’s AAA credit profile, ICL aggressively refinanced its old borrowings, dropping the average interest rate from 9-12% to about 6.83% by Q1 FY26. This drive, combined with the successful sale of non-core assets (generating around Rs 2,300 crore), saw ICL's total debt slashed by 55% YoY to Rs 1,159 crore by March 2025. The immediate impact was clear: finance costs plummeted to just Rs 27 crore in Q1 FY26 (from Rs 82 crore YoY), instantly improving the bottom line and providing the financial muscle to fund future growth internally. 2. The efficiency overhaul: Rs 1,500 crore capex Recognising that ICL's 12 aging plants with a total of 14.75 MTPA capacity were plagued by inefficiencies, especially high energy costs, UltraTech greenlit a significant Rs 1,500 crore capital expenditure plan for FY26-27. The bulk of this investment will be dedicated to modernising the plants, including installing Waste Heat Recovery Systems (WHRS) and transitioning to greener power. These changes aim for a 10-15% reduction in energy costs and will increase ICL's green power share from 3-5% to a targeted 86% by FY27. This focus on efficiency should add over Rs 300 per tonne to EBITDA by FY27. 3. Integration and synergy: Joining the UltraTech network The acquisition immediately brought ICL under the massive umbrella of UltraTech’s pan-India network. This integration is streamlining everything from logistics to branding. For example, ICL's output is increasingly being sold under the UltraTech brand via tolling arrangements, and the complete transition is expected by FY27. This provides immediate access to wider distribution and pricing power. India Cements Q1FY26 realisations were 4,700/MT compared to Ultratech brand’s 5,165 As more of ICL’s volumes are sold under the UltraTech brand, realisation is likely to inch up. Combined with lower costs/ton, ICL is aiming to hit Rs 1,000/MT EBITDA by FY28. Early momentum and future outlook The capacity utilisation, which was 62% in FY25, is now targeted to hit 75-80% in FY26 as plant upgrades come online. ICL achieved domestic sales volume of 2.18 MT, a growth of 11.6% YoY. Its cement realisations (net of logistics cost) improved by 5.7% QoQ. While risks such as input cost volatility and regional demand persist, the stock market has taken notice. Risks Despite strong progress, execution risks remain. The success hinges on the timely completion of a Rs 1,500 crore plant upgrade. Any delays could halt crucial cost savings, especially given persistent fuel and power cost volatility. The company must also manage contingent liabilities (around Rs 846 crore) if they materialise, which could divert cash needed for investment. Additionally, the Rs 1,000 per tonne EBITDA by FY28 is contingent on shifting more of ICL’s volume through the UltraTech brand. This can be challenging because in its core market, ICL’s ‘Coromandel’ brand is very strong, and it remains to be seen by when and to what extent the transition can occur. Finally, the turnaround must navigate a challenging South Indian cement market, which is marked by soft demand and intense pricing pressure from industry overcapacity, until lately. If the price competition continues, the turnaround may be delayed. Valuation vs expectations At the current market capitalisation of Rs 12,000 crore, ICL is valued at $95/ton, slightly above the recent M&A activity in the sector ($80-$90/ton). UltraTech’s open offer to acquire an additional 26% from public shareholders concluded at Rs 390/share, which is around the current share price. This could mean ICL is undervalued, assuming Ultratech did not already overpay for the company. This also ensures that Ultratech will drive changes to get an appropriate ROI on its investment. EV-Enterprise Value/EBITDA currently offers limited insight due to FY25 losses On a price-to-book (P/B) basis, ICL is valued at 1.2x, which is lower than its peers. This is not surprising because undervaluation in comparison to industry leaders is warranted. However, 1.2x is 50% lower than the industry P/B of 2.4x, according to Screener, and 60% lower compared to the P/B of 2.9x, according to Tijori. Conclusion ICL’s turnaround story is contingent on increasing capacity utilisation, transitioning ICL’s Coromandel brand to Ultratech, timely completion of cost-saving capex, and achieving Rs 1,000 per tonne EBITDA by FY28. Note: We have relied on data from www.Screener.in and www.tijorifinance.com throughout this article. Only in cases where the data was not available have we used an alternate, but widely used and accepted source of information. Rahul Rao has helped conduct financial literacy programmes for over 1,50,000 investors and has worked at an AIF, focusing on small and mid-cap opportunities. Disclosure: The writer or his dependents do not hold shares in the securities/stocks/bonds discussed in the article. 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