August 05, 2016 / 18:30 IST
Axis Direct's research report on Ramco CementsRamco Cements further repaid Rs 3 bn debt during the quarter on the back of strong free cash flow generation. Debt repayment has been faster than our expectation due to savings in working capital. We now expect total debt reduction of Rs 8 bn vs. Rs 5 bn earlier. Net debt to reduce to Rs 14 bn/ 7 bn by end FY17/18 from a peak of Rs 29 bn in FY14.
We raise our EPS estimate for FY17/18 by 9% to Rs 28/33 due to higher volume growth assumption. We also raise our target FY18 EV/EBITDA multiple to 10x from 9x to reflect higher-than expected decrease in debt level.ReiterateBUYwith revised target price of Rs 597 (Rs 503 earlier).
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