The Ramco Cements Q2 Results Review - Outlook Remains Favorable; Maintain 'Buy': Systematix

Systematix Research Report

The Ramco Cements Ltd.’s Q2 FY25 performance beat estimates as revenue/Ebitda/profit after tax were above expectations owing to healthy volume growth. Revenue was down by 12.5% YoY (-2.4% QoQ) to Rs 20.4 billion versus our estimate of Rs 17.7 billion owing to a sharp dip in realizations exacerbated by intense price pressures.

Volume was down by 2.6% YoY (+3.0% QoQ) to 4.5 million tonne (our estimate 3.8 mt). Blended Realization/tonne declined sharply by 10.2% YoY and 5.2% QoQ to Rs 4,539 (our estimate Rs 4,646/tonne). Ebitda was down 21.7% YoY (-2.3% QoQ) to Rs 3.1 billion; versus our estimate of Rs 2.2 billion. Ebitda/tonne dipped 19.6% YoY to Rs 695 due to weak realizations; despite a strong Rs 344/tonne saving in operating costs.

Cement capacity utilization for the quarter stood at 75% (versus 84% in Q2 FY24). The share of blended cement improved to 70% (69% in Q1 FY25) while premium products accounted for 27% of the portfolio.

We forecast a revenue/Ebitda/PAT CAGR of 6%/11%/24% over FY24-FY26E backed by a healthy 6.5% growth in volumes. We value Ramco Cements at 14 times (previous 13 times) FY26E EV/Ebitda arriving at a target price of Rs 1,000 (previous Rs 950) to factor in the expected strong government infrastructure push, particularly in Ramco’s core markets. We maintain a Buy.

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