Hold The Ramco Cements; target of Rs 625: JM Financial

JM Financial's research report on The Ramco Cements

Ramco reported in-line results with revenue growth at 7% YoY, aided by volume/realisation growth of 3.6%/1.4% YoY, respectively. EBITDA/t declined by 5.4% YoY as power/fuel and freight cost escalations more than offset the realisation growth. Other operating income for the quarter was higher YoY on an increase in wind farm income (Rs259mn in 1QFY18 vs Rs200mn in 1QFY17) and receipt of Rs90mn on account of industrial promotion assistance. The Company is expanding its grinding capacity from 16.5MTPA to 19.6MTPA via expansion in its West Bengal/ Vizag grinding units (1.1MTPA each) and entering the Odisha market with 0.9MTPA capacity.

Outlook

We roll forward the TP; valuing the stock at 10x EVE to arrive at a TP of Rs625 (Sep’18). Maintain Hold.