Buy Deccan Cement; target of Rs 535: HDFC Securities

HDFC Securities' research report on Deccan Cement

During 3QFY21, Deccan Cement (DECM) reported strong surge in volumes and profits riding on solid demand in AP, healthy regional pricing and robust cost controls. Thus, its sales vol/revenue/EBITDA/APAT grew 58/80/363/737% YoY. The icing on the cake is a 2.2mn MT expansion announcement (long due). Given that DECM has a net cash balance sheet (INR 1.3bn) and robust cash flow outlook, the doubling of capacity should not deteriorate its balance sheet.

Outlook

We maintain BUY rating on the stock with a revised TP of INR 535/share (5.5x Dec’22 EBITDA).