Motilal Oswal's research report on The Ramco Cements
TRCL’s volumes grew 22% YoY (but declined 2% QoQ) to 1.99mt in 3QFY17 (v/s our estimate of 1.93mt), driven by higher sales to eastern markets. Volumes grew 90-100% YoY in the eastern markets and 11% YoY in the southern markets. We expect growth to moderate due to high base and already high utilization for its eastern units.
OutlookTRCL is likely to generate free cash in excess of INR 24b over FY16- FY19, implying yield of 5%. We estimate 17%/24% EBITDA/PBT CAGR over FY17-19. The stock trades at an EV of 9.6x FY19E EBITDA and USD150/ton (FY19E). Maintain Buy; our target price of INR 815 (11.5x FY19E EBITDA) implies 20% upside.
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