February 16, 2017 / 16:35 IST
The company sells 95% of its cement production in the north while the remaining volume is sold in the central region. The northern region witnessed robust volume growth led by an increase in infrastructure spend by the government (especially road sector) helping the company to maintain healthy utilisation.
Outlook
We expect the EBITDA margin to improve from 4.1% in FY16 to 15.1% in FY18E. At the CMP of Rs 293, the stock is trading at an attractive valuation of 6.0x FY18E EV/EBITDA and an EV/tonne of US$42. Hence we maintain BUY with a revised target price of Rs 340/share (i.e. at 7.0x FY17E EV/EBITDA and EV/tonne of US$48).
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