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Buy Ramco Cements; target of Rs 790: Centrum

November 16
19:42 2017

Centrum’s research report on Ramco Cements

We maintain our Buy rating on Ramco Cements (TRCL) and with a revised TP to Rs790. During Q2FY18, despite weak demand in Tamil Nadu and Kerala markets, TRCL delivered 6% YoY volume growth and unitary EBIDTA of Rs1229/MT (though down 21% YoY on its peak performance last year). We remain bullish on the company owing to strong demand outlook for AP/Telangana and east markets, and expected recovery in Tamil Nadu and Kerala markets.

Outlook

We maintain our Buy rating, with a revised TP of Rs790 (12x FY19E EBITDA). Key downside risks: lower-than-expected demand and price growth and a sharp spike in energy and freight costs.

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