ICICI Securities is bullish on Orient Cement has recommended buy rating on the stock with a target price of Rs 54 in its research report dated May 28, 2020.
ICICI Securities research report on Orient Cement
Key takeaways from the management concall hosted by us include : i) demand recovery has been strong in May’20 with volumes at 75-80% of last year same time, led by rural and semi-urban housing; ii) company lost 0.23mnte volumes (4% of annual) and ~Rs300mn EBITDA in Mar’20 owing to Covid’19 disruptions; iii) current realisations are Rs300/te better than Mar’20 exit and likely to remain firm this year; iv)company’s expansion plan getting deferred owing to Covid’19; and v) net debt to EBITDA unlikely to exceed from the current ~3x.
Outlook
The concern about likely increase in debt owing to proposed expansion seems adequately priced-in with valuation at an all-time low of <US$40/te, or ~5xFY22E EV/E. Maintain BUY with unchanged target price of Rs54/share (6xFY22E EV/E).
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