Arihant Capital recommended hold rating on Ramco Cement with a target price of Rs 762 in its research report dated August 25, 2020.
Arihant Capital 's research report on Ramco Cement
Ramco Cement reported 25%YOY drop in revenues to Rs 10,418 mn mainly led by drop in sales volumes by 28% YOY during the quarter as the company’s operations were impacted from mid-March due to imposition of lockdown. On the other hand, realisations increased by 5% YoY. Costs per tonne increased mainly due to high RM cost and employee expenses on a per tonne basis due to lower sales volume absorption. On the other hand, power & fuel cost declined sharply due to fall in pet coke prices. With better realisations, EBITDA margins were at 25% for the quarter contracting by 101 bps YOY led by higher cost per tonne despite better prices. Net profit stood at Rs 1,096 mn, declined by 43% YOY, 23.9% QoQ for the quarter.
Outlook
We have a HOLD rating with revised TP of Rs 762 owing to strong historical performance, low cost producer and healthy balance sheet which are the key positives for the company.
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