Motilal Oswal's research report on The Ramco Cements
The Ramco Cements’ (TRCL) 2QFY26 EBITDA grew 24% YoY to INR3.9b (12% beat), led by higher-than-estimated volume (5% beat) and lower-than estimated opex/t. EBITDA/t rose 22% YoY (down 12% QoQ) to INR851 (6% beat). Adj PAT surged 191% YoY to INR743m (55% beat), albeit on a low base. Management indicated that muted volume growth was due to early monsoons, excess rainfall, and run-up to GST 2.0. The construction chemicals business, however, registered strong performance, with sales volume up ~72% YoY on a low base. TRCL has reiterated its target to reach 30mtpa cement capacity by Mar’26 through the commissioning of the line II at Kolimigundla and debottlenecking/grinding capacity additions at existing sites with minimal capex. It has monetized non-core assets worth INR5b out of the targeted value of INR10b. The balance is yet to be monetized, subject to necessary approvals.
Outlook
The stock is currently trading at 14x/12x FY26E/FY27E/FY28E EV/EBITDA (vs. its long-term average of 15x) and USD110/108 EV/t (vs. long-term average of USD130). We value the stock at 13x Sep’27E EV/EBITDA to arrive at our TP of INR1,060. Reiterate Neutral.
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