Centrum Research is bullish on Deccan Cements has recommended buy rating on the stock with a target price of Rs 670 in its research report dated May 29, 2018.
Centrum Research's research report on Deccan Cements
Deccan Cements (DCL) registered 19% YoY volume growth in Q4FY18, buoyed by sustained demand in AP/Telangana markets and demand recovery in other south markets. Still, aggressive pricing across south and elevated energy and freight costs continued to impact profitability - EBITDA/PAT down 17%/19% YoY. We continue to like DCL owing to (1) its strong balance sheet and (2) as we expect pricing to recover in south which should help the industry pass on the energy cost inflation.
DCL is trading at extremely cheap valuations (13% AOCF/EV yield, 5x FY20E EBITDA and USD41/MT replacement cost). We reiterate BUY with a revised TP of Rs670.
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