Dolat Capital recommended accumulate rating on The Ramco Cement with a target price of Rs 725 in its research report dated August 14, 2020.
Dolat Capital's research report on The Ramco Cement
TRCL's revenue was in line however, EBITDA and PAT below estimates. TRCL posted a muted set of numbers with 24.7%/ 27.6%/ 42.9% YoY de-growth in revenue/ EBITDA/ PAT to Rs10.4 bn/ Rs2.6 bn/ Rs1.1 bn in Q1FY21 due to -28.3%/ +5.9% YoY growth in volume/ realization (+12.1% QoQ). We expect 6.0%/ 8.1%/ 2.4% revenue/ EBITDA/ PAT CAGR over FY20-22E led by -6.9%/ 15.0% volume growth and 3.3%/ 2.0% realization growth in FY21E/ FY22E. We broadly maintain our estimates for FY21E/ FY22E factoring Q1FY21 results.
Outlook
We like TRCL for its strong distribution (supports its industry leading volume growth) and healthy profitability metrics (despite turbulent south markets). Thus, we maintain Accumulate with a TP of Rs725 based on 15x (in line to 5-year average) FY22E EV/EBITDA.
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