Titan Cement Completion of divestment of 75% stake in Adocim (Eastern Türkiye)

Titan Cement International (TCI) announced that it has completed the divestment of its 75% stake in Adocim Cimento Beton Sanayi ve Ticaret A.S. in Eastern Türkiye. TCI announced this transaction on 19th February 2025. The group will continue to operate its cement grinding and cementitious assets across other regions of Turkey, continuing to have a presence in the region which could become a high growth market. This transaction forms part of the group's broader strategy of strengthening its portfolio and to this end, TCI established a new partnership with JAYCEE in India, another high growth market. We continue to remain optimistic on Titan's prospects in the US given the recent tariff negotiations and because only 1/3rd of Titan America's sales is imported into the US (10% tariff). Additionally, the US remains to be a net-import market in which ~24% of consumption is imported, implying that, over the short to medium-term, local production alone will not be sufficient to suffice demand. We reiterate our ACCUMULATE rating and €45.0 TP.
News:
TCI has completed the sale of 75% stake in Adocim Cimento Beton Sanayi ve Ticaret A.S.
The plans to divest were first announced on 19th Feb'25.
TCI will continue to operate its cement grinding and cementitious assets across Turkey, continuing its presence in the region.
This transaction forms a part of TCI's broader strategy of further strengthening and diversifying its portfolio, both by region(s) and product offerings.
Investment Case: Since FY22, Titan Cement has experienced meteoric growth, mainly driven by US government spending on infrastructure projects which has resulted in a significant growth in demand and prices for cement in the US. Added to this, US cement consumption is likely to continue to outstrip supply which will directly benefit Titan Cement because the group not only manufactures cement locally in the US but also operates 2 import terminals which allow to bring in low-cost cement from Greece – this helps to increase the group's US capacity and is EBITDA accretive. Titan Cement also plans to invest between €600.0m to €800.0m during FY23 to FY26 to facilitate bolt-on M&A and growth capex which will help the group sustain its strong growth trajectory while the expected €350.0m to €450.0m maintenance capex will reduce disruptions in production and increase efficiency. Despite having taken a more conservative stance to account for a tariff-war driven recession, depressed demand for cement and elevated levels federal debt, our DCF points to an attractive valuation which we believe represents the strength of Titan Cement's diversified underlying business.