Arihant Capital recommended hold rating on Ramco Cement with a target price of Rs 778 in its research report dated November 03, 2017.
Arihant Capital's research report on Ramco Cement
The Ramco Cement Ltd. for its Q2 FY18 results reported net profit at Rs 169 cr with an increase by 8% from 156 cr in Q1 FY18 & decline of 19% from Rs.207 cr in Q2 FY17. For the quarter ended June, 2017, company reported a fall in revenue by 9% to Rs 1,066 cr vs. Rs 1,122 cr in the corresponding quarter of previous year. The sale volume of cement has increased by 5% during the six months period ended 30th September 2017, compared to the corresponding period of the previous year. RCL’s sales volume came in at 2.15mnT (including 0.03mnT exports) vs. 2.02mnT (including 0.04mnT exports) in the corresponding quarter of previous year. During the current year, cement demand in Tamil Nadu witnessed significant slowdown due to effects of severe drought and shortage of river sand. However, the sales have grown in the Eastern markets.
The company continues to strive for achieving better operating efficiencies through various cost reduction initiatives in power & fuel and logistics despite the adverse effects on operating cost due to continuous increase in diesel prices which resulted in higher EBITDA which came in at Rs 308 cr vs. Rs 295 cr as compared to previous quarter. Interest cost for the six months period ended 30th September 2017 has come down due to repayment of borrowings in the earlier periods. Besides the company's credit rating of A1+ for short term borrowings and AA+ for long term borrowings is helping the company to access cheaper sources of funds.
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