ICICI Securities has expressed a bullish outlook on Ramco Cements, issuing a buy rating on the stock and setting a target price of Rs 1051 in its research report dated September 30, 2023.
According to ICICI Securities’ research report on Ramco Cements, the company has shown impressive volume growth in the past six quarters, averaging more than 30% year-on-year. This, coupled with the improving price sentiment in South India, positions Ramco Cements (TRCL) as a significant beneficiary.
The report highlights that Ramco Cements is in an advantageous position with its net debt expected to peak and margins reaching a bottom, going from a net debt/EBITDA ratio of 3.6x in FY23 to 1.4x in FY26E and margins increasing from 14.6% in FY23 to around 20% in FY26E. These factors combine to create a compelling investment opportunity.
Additionally, the company’s visibility in terms of sustained volume growth, supported by its recent acquisition of limestone mines in Andhra Pradesh, and the improving return on equity (RoE) from approximately 5% in FY23 to around 13% in FY26E further enhance the investment case for TRCL.
ICICI Securities values Ramco Cements at 13x Sep’25E EV/EBITDA, which is slightly below its long-term average of 14x. As a result, they have set a target price of INR 1,051 per share for TRCL.
Investors considering Ramco Cements may find this recommendation valuable, as it provides insights into the company’s growth potential and investment prospects.