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Reliance Securities
Mangalam Cement (Buy)
CMP: ₹261
Target: ₹380
Mangalam Cement had reported a sharp recovery in its operating performance in 1QFY20. Further, a meaningful q-o-q reduction in opex/tonne by ₹135 was more heartening than realisation recovery.
We believe sustainability of downward cost scenario also to be aided by the WHRS which will be the key catalyst for the company, going forward.
Company’s initiative to sell more PPC mainly led by higher production from Aligarh SGU is likely to aid its operational performance in ensuing quarters. Current valuations at 5.2x and 4.4x EBITDA of FY20E and FY21E look attractive, in our view.
We maintain our fundamental BUY rating on the stock with a target price of ₹380.
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