Buy Ramco Cements; target of Rs 809: KR Choksey

KR Choksey's research report on Ramco Cements

The cement production in the Southern region remained flattish during the quarter on account of restriction on sand availability and subdued infrastructure spending in Tamil Nadu due to of political issues.

Outlook

With an expected net debt of INR 3664 mn by FY19E, the company trades at an EV/EBITDA of 11.3x and EV/ton of $156. On account of i.) outperforming volume growth, ii.) most efficient cost structure, iii.) healthy balance sheet, and iv) robust return ratios; we value The Ramco Cements Ltd at an EV/EBITDA of 13x on FY19E arriving at a target price of INR 809/share. Maintain BUY.