February 09, 2017 / 15:53 IST
The Ramco Cements Limited (TRCL), flagship company of the Ramco group, operates in Southern region of India with a capacity of 12.5 MTPA of integrated plants and 4 MTPA of satellite grinding units having a market share of 9%. We expect the southern market to grow at 7.2% CAGR over FY16-FY20E and hence believe that TRCL is regionally well placed to benefit from the growing infrastructure opportunities and expanding off-take in the Government projects.
OutlookWe believe TRCL’s robust volume growth, operating efficiencies, margin sustainability and financial deleveraging will help TRCL to maintain its premium valuations. We value The Ramco Cements Ltd at an EV/EBITDA of 12X FY-19E arriving at a price target of INR 772/share translating into a 14% upside from the current price of INR 680/share.
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