February 10, 2017 / 16:32 IST
Ramco Cements Q3FY17 EBITDA of Rs 2.62 bn (+7% YoY) came marginally lower than expected on account of lower than expected margins. Though volume growth of 22% YoY was better than expectation of 13% YoY, realisation came a tad lower with 2% QoQ decline. EBITDA/ton stood at Rs 1319/t, declined by 12% YoY (on lower realisations).
Outlook
Valuation at 13.4x/11.2x FY18E/19E EV/EBITDA looks fair (after the recent run-up in stock price by 18% in one month) and factors in most of the positives like high growth potential (from improving fundamentals in south region) and focus on de-leveraging. We downgrade Ramco to Hold (from Buy earlier) with revised TP of Rs 723 (based on 13x Sept-18E EV/EBITDA).
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