The Orient Cement Ltd stock has been beaten black and blue. In the past three trading sessions, shares of the mid-sized cement maker have lost nearly 10%, reacting to its dismal March quarter performance.

Investors were turned off the most by the 3% year-on-year decline in cement sales volumes. Volumes stood at 1.68 million tonnes (mt), impacted by weak demand in south India and increasing competition in the company’s core operating markets of Maharashtra, Andhra Pradesh/Telangana and Karnataka.

What’s more, with Shree Cement Ltd commencing operations in the Gulbarga region of Karnataka from fiscal year 2019 (FY19), competitive pressures would only intensify.

But it is not just the quarterly results investors are upset about. What has also soured sentiment is the lack of a clear timeline on the company’s deal with Jaiprakash Associates Ltd.

In May 2017, Orient Cement had announced the acquisition of two grinding units from Jaiprakash Associates for an all-cash consideration of Rs1,946 crore. The company’s management had then expected the acquisition to complete by March 2018.

However, with a slew of approvals still pending, some cement analysts now estimate that completion could take two more quarters.

While this inorganic expansion will boost Orient Cement’s capacity from 8mt to 12.2mt, giving it exposure to the markets of central and east India, it would also lead to equity dilution and higher debt-equity ratio.

Wary of the same, some brokerage firms have downgraded Ebitda estimates on the stock for FY19 and FY20. Ebitda stands for earnings before interest, tax, depreciation and amortization. Also, Orient Cement’s objective to reach 15mt capacity by 2020 could further stretch its balance sheet, they cautioned.

The company’s shares have fallen around 25% on a year-to-date basis compared to a 4% gain in the BSE 500 index. Though shares of its competitors Dalmia Bharat Ltd and India Cements Ltd have also been under pressure this year, Orient Cement’s shares have been hit the most. According to Emkay Global Financial Services Ltd, the pain in the stock may not be over yet.

“We recently downgraded EBITDA estimates by 17-19% for FY19/20E and believe that Bloomberg consensus elevated expectations should see steep downgrades. We remain apprehensive about the company’s acquisition plans—the management expects approval in 3-4 months. Maintain SELL with a target price of Rs116," it said in its earnings review report.

Orient Cement trades at Rs131 currently, down from around Rs145 last week.

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