Prabhudas Lilladher's research report on Ramco Cements
The Ramco Cements (TRCL) reported Q2FY17 earnings above our expectation. The key take‐away from the earnings lies in the strong volume growth (+19% YoY) while maintaining margins (EBITDA/t@ Rs 1500), unlike other south based majors facing sharp cut in earnings. We expect demand recovery to sustain on the back of enhanced focus of state governments on infra spending, new capital development in Amaravati and revival in small scale housing demand sponsored under various state government schemes. Concurrently, TRCL has also been strengthening its balance sheet by aggresively cutting down the debt. Given the highly competitive operations and strong management pedigree, we rate TRCL as the best play on recovery in South demand and hence reiterate “BUY” with a TP of Rs 730, an EV/EBITDA of 14.5x FY18E.
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