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Nirmal Bang Report
In FY23/4QFY23, The Ramco Cement's (TRCL) aggregate revenue increased primarily on the back of higher volume (attributable to B2B sales) whereas realizations moderated despite a 25% increase in the proportion of premium products. The NBIE channel checks confirm that the company's strategy of using the right cement for the right applications has helped it to position the brand in Category A and increase its market share in its core markets.
This is the result of sustained promotional activities - ATL/BTL and technical & services training programs. Achieving the volume growth target of 20% for FY24 will necessitate improved cost & freight management with regard to the inter-unit movement of clinker to the grinding units (since busy season surcharge of 15%, which was re-instated by Railways w.e.f. 01-10-2022 will be imposed throughout the year).
NBIE has faith in TRCL management and its ability to execute but will closely monitor its commitment to debt management and growth over the next two quarters. We are positive about TRCL but maintain our ACCUMULATE rating with a target price (TP) of Rs945, reflecting an upside of 12% from CMP. The primary threats are decline in demand and cost escalation.
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