Buy Orient Cements; target of Rs 63: Cholamandalam securities

Cholamandalam securities is bullish on Orient Cements has recommended buy rating on the stock with a target price of Rs 63 in its research report dated May 29, 2020.

Cholamandalam securities' research report on Orient Cements

ORCMNT's (Orient Cement) 4QFY20 declined 13% YoY to ₹6.5bn due to 14% YoY fall in volumes (volumes: 1.57mnT) while realisations improved 1% YoY. EBITDA during 4QFY20 came in at ₹1.25bn, down 19% YoY. Negative impact of weak Volume was offset by higher realisations and savings in costs. EBITDA margin for 4QFY20 came in at 19.1% vs. 9.7% QoQ/20.4% YoY. Costs/t was lower 2% QoQ/+3% YoY. Average distance travelled was marginally above 300km. Beginning May 2020, rake availability gradually impacted due to diversion for movement of food grains/ harvests.

Outlook

At CMP, the stock is trading at 4.2x EV/EBITDA of FY22E. We upgrade the stock to Buy with a revised target price of ₹63, assigning 5.5x EV/EBITDA of FY22E.

For all recommendations report, click here

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