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LKP Securities
Ramco Industries (Accumulate)
CMP: ₹174.85
Target: ₹230
Part of the Chennai based Ramco Group, Ramco Industries is one of the very few holding companies in the listed space having a stable business with a long growth runway in roofing.
With 10 manufacturing facilities strategically located, Ramco Industries is well positioned to play the rural growth story in India since demand for its products largely remains unaffected even during the Pandemic. Its brands Ramco Build, Hilux, Hicem, Poweroof & Greencor have a strong brand equity among customers.
Our Interaction with dealers point towards strong demand aided by a good rabi group and migrants returning back to villages. Government of India initiatives’ are helping Ramco as it has a strong brand equity and a robust distribution network with over 15 per cent market share in fibre cement roofing as well as in boards & panels.
Virtually debt-free, Ramco Industries present MCAP not even takes into account the value of its 21 per cent equity stake in Ramco Cement even after considering holding company discount. Trading at 0.4x book value the single-digit PE multiples in our view do not really capture the inherent strength and resilience displayed by its business model during the Pandemic. Accumulate Ramco Industries for a potential upside of 50 per cent from present levels.
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