Accumulate The Ramco Cement; target of Rs 926: Dolat Capital Market

Dolat Capital Market's research report on The Ramco Cement

TRCL’s revenue was in line however, EBITDA, Realization/tn, EBITDA/tn and PAT were above estimates. TRCL posted robust set of numbers with -4.5%/ +49.7%/ +40.2% YoY growth in revenue/ EBITDA/ PAT to Rs12.6 bn/ Rs4.4 bn/ Rs2.4 bn led by -18.8%/ +16.8% YoY growth in volume/ realization (+4.1% QoQ). We expect 9.3%/ 16.2%/ 15.8% revenue/ EBITDA/ PAT CAGR over FY20-23E led by -8.8%/ 17.0%/ 10.0% volume growth and 11.2%/ 0.0%/ 0.5% realization growth in FY21E/ FY22E/ FY23E. We introduce FY23E. We increase our revenue estimates by 5.5%/ 5.2% and EBITDA estimates by 37.2%/ 26.3% for FY21E/ FY22E factoring H1FY21 results. Accordingly, we increase our PAT estimates by 64.9%/ 42.3% for FY21E/ FY22E.

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 Rs926 based on 14x (5-year average) Sept’22E EV/EBITDA.

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