Ramco Cements Q4 Results Review - Ebitda Inline; Weak Pricing An Overhang: Motilal Oswal

Motilal Oswal Report

The Ramco Cements Ltd.’s Q4 FY24 Ebitda was in line with our estimates, as higher-than-estimated volume offset lower-than-estimated realisation. Its Ebitda grew 1% YoY to Rs 4.2 billion (estimate: Rs 4.0 billion). Ebitda/tonne stood at Rs 760 versus estimated Rs 794. Operating profit margin was down 50 basis points YoY to 15.6% (estimate: 16.1%). Profit after tax was at Rs 1.2 billion versus our estimate of Rs 1.1 billion due to lower-than-estimated depreciation and tax rates.

Management has reduced its capex guidance by Rs 5 billion to Rs 12 billion for FY25. Its capacity utilisation stood at ~96% in Q4 FY24 aided by strong demand in both eastern and southern regions.

It is expanding its clinker/grinding capacities at it Kurnool, Andhra Pradesh plant by 3.15 mt/1.5mtpa at a capex of Rs 12.5 billion. Its net debt declined Rs 2 billion sequentially to Rs 48 billion and net debt-to-Ebitda was 3.0 times in FY24.

We cut our earnings per share estimates by 5% (each) for FY25/FY26. We value Ramco Cements at 12 times FY26E EV/Ebitda to arrive at our revised target price of Rs 870 (earlier Rs 940). We reiterate our Neutral rating on the stock.

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