Neutral The Ramco Cements; target of Rs 1050: Motilal Oswal

Motilal Oswal's research report on The Ramco Cements

The Ramco Cements (TRCL)’s 1QFY26 EBITDA was below our estimate due to lower-than-estimated volume. EBITDA increased by ~24% YoY/QoQ to INR4.0b (~11% miss), and EBITDA/t increased ~32% YoY to INR966 (est. INR995). PAT increased ~142% YoY to INR860m (~27% below our estimates). The management indicated cement sales volume declined ~7% YoY due to weak demand led by the early monsoon in Kerala and eastern markets. While the construction chemical business posted a strong growth of 79% YoY, albeit on a low base. It reiterated the capacity target of 30mtpa to be achieved by Mar’26 with the commissioning of line-2 and debottlenecking of existing capacity at the Kurnool plant and adding grinding capacities in existing plants with nominal capex. TRCL has monetized INR5.0b so far, through sales of non-core assets out of the targeted INR10.0b. The balance is likely to be monetized before Sep’25 vs. earlier expectations of by Jul’25, a slight delay due to pending approvals.

Outlook

The stock is currently trading at 17x/15x FY26E/FY27E EV/EBITDA (vs. its long-term average of 15x) and USD140/USD120 EV/t (vs. long-term average of USD130). We value the stock at 13x Jun’27E EV/EBITDA to arrive at our TP of INR1,050. Reiterate Neutral.