HDFC Securities is bullish on Deccan Cements has recommended buy rating on the stock with a target price of Rs 1468 in its research report dated May 23, 2017.
HDFC Securities' research report on Deccan Cements
Deccan Cements (DECM) delivered EBITDA/t of Rs 706/t (vs estimated: 683/t, -17.7% YoY, -11.8% QoQ), driven by flattish volumes (0.36 mT, 1.6% YoY). A sequential decline in realisations (Rs 4,163/t, 4.4% YoY, -6.9% QoQ) was offset largely by a decline in selling cost (Rs 1,466/t, 11.1% YoY, -19.6% QoQ) and flattish NSRs (Rs 2,702/t, 1.1% YoY, 1.9% QoQ).
The deleveraging (large part of which has already played out) helps DECM navigate its volatile market with more comfort, as compared to peers. We believe that the company can plan its next expansion once cash levels become comfortable (say 30% equity contribution for a 1 mTPA kiln order). We maintain our BUY rating (TP: Rs 1,468, 6.5x EV/EBITDA, implied USD 60/t).
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