Buy The Ramco Cement; target of Rs 918: Motilal Oswal

Motilal Oswal's research report on The Ramco Cement

TRCL’s volumes grew 20% YoY to 2.74mt (est. of 2.6mt) in 4QFY18, driven by strong growth in the eastern market. South volumes also grew at a healthy pace. Cement realizations stood at INR4,571/ton (+2.7% YoY, -0.8% QoQ) v/s our estimate of INR4,539/ton due to weaker prices in south. Revenue grew 23% YoY to INR12.5b, better than our estimate of INR11.9b, due to the realization beat.

Outlook

We estimate 17%/24% EBITDA/PBT CAGR over FY18-20. The stock trades at EV of 13x FY20E EBITDA, and USD158/ton (FY20E). Maintain Buy with TP of INR918 (valuing at 15x FY20E EBITDA), implying 15% upside.