Fundamentals

THE RAMCO CEMENTS 

Ticker : 500260
BUY: Rs667.10
Target: Rs740 

Ramco Cements manufactures and markets Portland cement, blast furnace slag cement, white cement and Pozzolana cement. In Q3FY19, the company’s revenue increased by 15.2 per cent YoY to Rs 1206.5 crore. However, EBITDA was down by 7.2 per cent and margin plunged from 17.4 per cent to 13.19 per cent. PAT plunged by 17.7 per cent YoY to Rs 101.07 crore. Ramco plans to expand its capacity to 22.75 MT from the current 16.5 MT. Of the 6.25 MT capacity expansion, 2 MT capacity will be in the East and 4.25 MT in Andhra Pradesh. The total capex outlay for these projects is expected to be Rs 3,430 crore. The southern region is expected to witness an upturn, mainly led by higher government spending on low cost housing, irrigation in AP and Telangana and revival in the Kerala market. Considering the above factors, we recommend it as a BUY. 

TORRENT POWER 

Ticker : 532779
BUY: Rs242.95
Target: Rs270 

Torrent Power Limited is an India-based company engaged in electricity generation, transmission and distribution. It is the sole distributor of electricity to consumers in the cities of Agra, Ahmedabad, Bhiwandi, Gandhinagar and Surat. In Q3FY19, the company’s revenue increased by 17.6% per cent YoY to Rs 3217 crore. However, EBITDA was down by 10.2 per cent and margin plunged from 21.9 per cent to 15.13 per cent. PAT jumped by 18.9 per cent YoY to Rs 239.36 crore. The company has been awarded distribution licence for Dholera Special Industrial Region. A capex of Rs 500 crore is estimated in the licensed area over 5 years, depending on how industries come up in the area. The management expects ROE of 14 per cent from the project. Considering the above factors, we recommend it as a BUY.