Ramco Cements Q4 Results Review: Dolat Capital Maintains 'Sell', Says High Capex Remains A Concern

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Dolat Capital Report

The Ramco Cements Ltd.’s Q4 FY25 results came much below estimates.

We expect revenue/Ebitda/adjusted profit after tax compound annual growth rate of 11.9%/34.4%/233.0% over FY25-27E, led by 7%/10% volume growth and 6.5%/0% blended realization/tn growth in FY26E/FY27E.

We increase our FY26E/FY27E Ebitda estimates by 7.8%/4.9% post factoring higher realization/tonne. Capex remains at elevated levels of Rs 114 billion (Rs 16.3 billion/year)/Rs 126.1 billion (Rs 15.8 billion/year) over FY19- 25/FY19-26E, for capacity addition of 7.8/13.5 mtpa translating to Rs 14.7 billion ($171/tonne)/Rs 9.3 billion ($109/tn) per mtpa which is the highest in the industry.

Despite higher capex, we expect improvement in profitability from these levels, hence, we increase our multiple from 10x to 11x. However, considering ~11% stock price run-up from Q3 FY25 update note and our concern on higher capex, we maintain our ‘Sell’ rating with a revised target price of Rs 915 based on 11x FY27E EV/bitda + 50% FY27E capital work in progress.

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