Accumulate The Ramco cements; target of Rs 760: Geojit

Geojit's research report on The Ramco cements

Q1FY21 revenue de-grew by 24.7%YoY mainly due to sharp decline in volumes (-28%ToY Vs -38% of industry) impacted by Covid-19. EBITDA margin declined by 100bps YoY to 25%, but adjusted for one-off items (donation, ESOP & Covid-CSR) improved to ~26.8% Vs 26% aided by benign fuel costs and better realisation. Capacity expansion in East & South is on track with slight delay due to lockdown restrictions. Total capacity would be 20.8M, post expansion Demand outlook continue to be uncertain in the short-term but expect to witness strong growth in FY22E. TRCL to witness above industry volume growth aided by market share gains through expansion. Currently TRCL trades at 13.8x 1Yr Fwd EV/EBITDA. We value at ~13x FY22E EV/EBITDA (5Yr Avg=14x).

Outlook

We maintain Accumulate rating but revise our Target to Rs.760 (earlier Rs.580) considering better than expected performance.