Buy The Ramco Cements; target of Rs 910: KR Choksey
KR Choksey is bullish on The Ramco Cements has recommended buy rating on the stock with a target price of Rs 910 in its research report dated February 07, 2018.
February 15, 2018 / 02:03 AM IST
KR Choksey's research report on The Ramco Cements
The Ramco Cements Ltd (TRCL) delivered a volume/revenue growth of 14.5%/12% y-o-y for Q3FY18 and volumes stood at 2.27 MT. The core markets of TRCL has suffered a significant slowdown during the current year owing to shortage of river sand in Tamil Nadu (TN) and lower off-take of infrastructure and housing projects in Kerala. Both TN/Kerala has de-grown by 17.65%/2.02% y-o-y for 9MFY18 despite a low base.
With an expected net debt of INR 4337 mn by FY20E, the company trades at an EV/EBITDA of 10.4x and EV/ton of $132. On account of a.) Higher revenue visibility, b.) Efficient cost structure, c.) Financial de-leveraging, and d.) Robust return ratios; we value The Ramco Cements Ltd at an EV/EBITDA of 13x on FY20E arriving at a target price of INR 910 translating into a potential upside of 24.1% from CMP of INR 733. We maintain our BUY rating on the stock.
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