Motilal Oswal has given Buy recommendation for The Ramco Cements recommended buy rating on the stock with a target price of Rs 1106 in its research re with a target price of Rs. 1106 in its research report issued on Oct 25, 2021
Motilal Oswal’s research report on The Ramco Cements
TRCL’s 2QFY22 result reflects volume recovery in South India, post the slowdown seen during COVID-19 lockdowns. Volume improved by 27% QoQ and 23% YoY, which helped it to operate its clinker plants at 74% capacity. The company remains a play on the volume recovery theme and one of the better picks in the Cement space, led by its capacity expansion plans (clinker capacity increase of 38%) and Balance Sheet deleveraging (net debt/EBITDA expected to peak out at 2.1x in FY22E and should improve to 1x in FY24E).
Recent price increase in its key markets should help to mitigate fuel cost increases. We raise our FY22E/FY23E/FY24E EPS estimate by 18%/16%/12% considering higher prices in South India and a lower tax rate (25.17% v/s 31% earlier). We upgrade our rating to Buy with a revised TP of INR1,106 (17% upside).