Ramco Cements Q1 Preview: Weak prices, realisations, stiff competition pour concrete on profit hopes

Analysts will closely monitor Ramco Cements' management commentary on demand conditions during this seasonally weak quarter, price sustainability amid intensifying competition, and ongoing sector consolidation.

Ramco Cements is set to present its earnings report for the first fiscal quarter of FY25 on July 26.

The cement manufacturer is expected to deliver a subpar performance in Q1FY25 with net profit and revenue declining, primarily due to weaker cement prices because of increase in intense competition and higher regional concentration lately.

According to a Moneycontrol poll, Ramco Cements' net profit is expected to slump 51 percent on-year to Rs 38 crore. Revenue is seen falling around 1.3 percent YoY to Rs 2,221 crore.

Even the most optimistic estimate sees Ramco Cements' net profit falling 31 percent on-year. The most pessimistic projection suggests that net profit might sink nearly 69 percent YoY.

On a sequential basis, net profit and revenue are seen falling 68 percent, and 17 percent, respectively.

Also Read | DLF's net profit jumps 22.5% to Rs 646 crore in Q1FY25, revenue down 4%

What factors are driving the earnings?

Weak demand: The slowdown in construction activities during the general elections in April and May adversely impacted cement sales in these months. Scorching heat, labour shortages, and unseasonal rain in some regions further dented demand during Q1FY25.

Muted prices: Cement prices entered Q1FY25 with a steep hike announcement in some regions, but with lower-than-historical average demand and a sudden ramp-up of M&As among large players, sustaining any price hike became impossible. Hikes implemented in April were reversed during May and June due to soft demand and stiff competition.

Decline in realisations: According to analysts at Motilal Oswal, price realization is likely to decline around eight percent YoY due to weak pricing in the southern region. Price realisation in cement refers to the average revenue a company earns per unit sold. It helps gauge the average income per ton, with higher realisation indicating better profitability per unit.

High Costs: The cement maker's depreciation/interest expenses are estimated to increase by 14 percent and 12 percent on-year, respectively, according to Motilal Oswal.

What to look out for in the quarterly show?

Analysts will closely monitor Ramco Cements' management commentary on demand conditions during this seasonally weak quarter, price sustainability amid intensifying competition, and ongoing sector consolidation.

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