Motilal Oswal's research report on Ramco CementsRamco Cement’s (TRCL) 3QFY16’s volume de-growth reduced from double digit level of previous 5 quarters to 5.4%YoY (-5% QoQ) to 1.63mt led by broader stabilization in south market and base effect. Realizations were resilient at 0.5% QoQ. With marginal contribution from wind power business, revenue stood at INR8.1b (3.3%YoY, -7% QoQ).TRCL offers strong play on southern recovery due to (a) superior brand, (b) edge over cost efficiencies, and (c) visibility of deleveraging (stared in FY16). Our assumption of 6% volume and 4% price CAGR to drive 15%/22% EBITDA/PAT CAGR for TRCL in FY16-18. We upgrade FY16- 18 EBITDA by 6-12% to factor in better price, volume and cost. The stock trades at 9.3x/7.2x FY17E/18E EV/EBITDA, and EV/ton of USD97. We maintain Buy with a TP of INR450, an upside of 20% (valuing cement business at 8.5x FY18E EBITDA, EV/ton of USD105). For all recommendations, click here Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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