February 15, 2017 / 13:30 IST
TRCL has been capitalising its balance sheet strength to build fuel inventory, thus moderating impact of rising energy costs. Thus, we expect TRCL to continue to deliver 17% EBITDA CAGR over FY16-19E and sustain industry leading operating performance/ return ratios. Amid low capex outlook for the next two to three years, we estimate TRCL to become a zero net debt company in FY118/19E.
Outlook
We maintain our Buy rating on Ramco Cements (TRCL) and revise our TP to Rs 770 (earlier TP Rs 700). TRCL delivered strong 22% YoY volume growth in Q3FY17 (+11% YoY growth in south, +68% YoY in east) which offset weak pricing YoY and led to 8% YoY EBITDA growth. Lower interest cost and higher other income further boosted adj PAT growth by 43% YoY. Strong volume growth should continue to deliver operating leverage gains.
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