Arihant Capital recommended hold rating on Ramco Cement with a target price of Rs 660 in its research report dated June 25, 2020.
Arihant Capital 's research report on Ramco Cement
Ramco Cement reported weak set of numbers in Q4FY20 with fallen annual figures but a solid growth sequentially. The standalone topline degrowth was at -9.3% YoY/8.8% QoQ to Rs 13,899 mn, EBITDA for the quarter fell by -14.1% YoY/37.6% QoQ to Rs 2,792 mn and Net Profit stayed at Rs 1,462 mn, down 11.6% YoY/up 54.2% QoQ. EBITDA margin for the quarter contracted sharply by 113 bps at 20.1% for Q4FY20, primarily due to higher sales and promotion expenses incurred by the company during the quarter and negative operating leverage caused by the COVID-19-led shutdown that marred sales during the last week of March. Realisation for the quarter went up by 5.5% sequentially, on account of fallen raw material prices, pet coke and cost of fuel in comparison to previous year.
Outlook
We maintain our HOLD rating with revised TP of Rs 660 owing to the company’s strong fundamentals, healthy reserves to ride through the pandemic and an expected V-shaped recovery in demand in H1 FY21.
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