Ramco Cements Q1 Results Review - Optimism Continues For H2; Maintain Buy: Systematix

Systematix Research Report

Ramco Cements Ltd.’s Q1 FY25 performance was largely in line with expectations as revenue/Ebitda met estimates while profit after tax slipped due to higher interest expenses.

Revenue was down by 6.8% YoY (-21.9% QoQ) to Rs 20.9 billion versus our estimate of Rs 21.7 billion owing to flattish volumes and a sharp dip in realizations exacerbated by intense price pressures in Southern markets.

Volume was up by only 1.1% YoY (-20.6% QoQ) to 4.4 milliont onne (our estimate: 4.6 mt). Blended Realisation/tonne declined sharply by 8.1% YoY and 1.6% QoQ to Rs 4,790. Ebitda was down 6.5% YoY (-23.4% QoQ) to Rs 3.2 billion; in line with our estimate of Rs 3.3 billion. Ebitda/tonne dipped 7.7% YoY to Rs 733 despite a ~Rs 50/tonne saving in operating costs as realizations nosedived.

Cement capacity utilization for the quarter stood at 77% (versus 79% in Q1 FY24). The share of blended cement was 69% (68% last quarter) while premium products accounted for 25% of the portfolio.

We forecast a revenue/Ebitda/PAT CAGR of 9%/13%/23% over FY24-FY26E. We value Ramco Cement at 13 times FY26E EV/Ebitda arriving at a target price of Rs 950. We maintain a Buy.

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