The Ramco Cements Ltd - Profitability sinks - Emkay

Reco: ACCUMULATE
CMP: Rs 170
Target Price: Rs 210

- 2QFY14 EBITDA at Rs1.18 bn, (-62%yoy) came significantly below estimates led by lower cement realisation (Rs4007/t vs est Rs4055/t), higher cost & lower windmill revenues

- EBITDA/t at Rs401 (estimate of Rs600/t) decline 69% yoy impacted by 13.5% yoy realisation decline. PAT at Rs183 also came in sharply lower than estimates (Rs476 mn)

- Lower profitability and higher working capital leads to increase in debt by Rs1.5bn. Cut FY14E/15E EPS by 23%/17%, led by lower cement price & higher cost

- Margins to bounce back as prices in RCL's key markets have rebounded sharply. Cash generation & debt repayment key for stock performance. Valuation at 6x EV/E & EV/t of USD74 factors in concerns ACCUMULATE. Target Rs210.

Source : Equity Bulls

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