Accumulate The Ramco Cement; target of Rs 725: Dolat Capital

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.