ICICI Direct has given Buy recommendation for Ramco Cements with a target price of Rs. 1200 in its research report issued on Jul 28, 2021
ICICI Direct’s research report on Ramco Cements
Ramco Cements is the dominant player in South India with cement capacity of 19.7 MT spread across Tamil Nadu, Karnataka, Andhra Pradesh, Odisha and West Bengal. In terms of sales, south contributes ~71% of sales while east contributes 24%, which is served via grinding units in WB (2 MT) and AP (2 MT). The company also has a windmill capacity of 125.95 MW, captive thermal power plants of 175 MW and 18 MW of WHRS Self-reliance on power, split grinding units near markets and focus on green power has helped the company to remain a cost efficient player in South India
Outlook
Post completion of major capex, debt levels would peak out with growth accelerating at revenue CAGR of 20%. Hence, we maintain BUY rating We value Ramco at Rs 1,200 i.e.15x FY23E EV/EBITDA