Dolat Capital recommended accumulate rating on The Ramco Cement with a target price of Rs 695 in its research report dated June 19, 2020.
Dolat Capital's research report on The Ramco Cement
TRCL’s revenue and EBITDA were marginally above estimates whereas PAT above estimates. TRCL posted a muted set of numbers with 9.3%/ 14.1%/ 11.6% YoY de-growth in revenue/ EBITDA/ PAT to Rs13.9 bn/ Rs2.8 bn/ Rs1.5 bn in Q4FY20 due to (10.9%)/ 1.5% YoY growth in volume/ realization (+5.3% QoQ). We expect 3.9%/ 6.4%/ 0.05% revenue/ EBITDA/ PAT CAGR over FY20-22E led by (7.7%)/ 15.0% volume growth and (0.4%)/ 2.5% realization growth in FY21E/ FY22E. We believe lockdown due to covid-19 will severely affect industry and TRCL’s volume in Q1FY21E and FY21E. We like TRCL for its strong distribution (supports its industry leading volume growth) and healthy profitability metrics (despite turbulent south markets).
Outlook
Considering 25% run up in stock price during YTDFY21, we recommend Accumulate with a TP of Rs695 based on 15x (in line to 5-year average) FY22E EV/EBITDA.
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