Motilal Oswal recommended Neutral rating on The Ramco Cements with a target price of Rs 620 in its research report dated August 15, 2020.
Motilal Oswal 's research report on The Ramco Cements
The Ramco Cement’s (TRCL) 1QFY21 results highlight the company’s continued market share gains. Volumes declined only 28% YoY for TRCL (v/s 53% YoY decline for regional peer India Cements). Cement EBITDA/t also improved to INR1,283 (+34% QoQ), led by higher prices in the South. We maintain our FY21/FY22E EPS estimates and retain Neutral rating as valuation at 13.0x FY22E EV/EBITDA prices in the benefit of the expansion-led market share gains. Commissioning timelines of ongoing expansions have also been pushed ahead by 2-3 months due to COVID-19 disruption.
Outlook
The stock trades at 13.0x FY22E EV/EBITDA and USD121/t of capacity which are a significant premium to peers. We value it at 12x FY22E EV/EBITDA (in line with 10-yr average) to arrive at TP of INR620. Maintain Neutral.
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