Accumulate The Ramco Cements; target of Rs 969: KR Choksey

KR Choksey's research report on The Ramco Cements

The Ramco Cements Q3FY25 earnings missed our estimates. Revenues stood at INR 19,835 Mn, down 6.0% YoY (-3.0% QoQ). EBITDA declined by 29.6% YoY (-11.2% QoQ) to INR 2,791 Mn; EBITDA margin stood at 14.1% (-472bps YoY/ -130bps QoQ). Adj loss stood at INR 62 Mn, down 107.3% YoY (-124.1% QoQ), missing our projections due to weak operating performance; PAT margin stood at -0.3% (-431bps YoY / -157bps QoQ). We reduce our FY26E/FY27E EBITDA by 7.2%/3.0% to INR 18,155/21,524 Mn, factoring in weaker than anticipated Q3FY25 performance and a more gradual recovery in cement prices in the Southern region.

Outlook

We rollover our valuation to FY27E and assign an EV/EBITDA of 13.0x, to arrive at a TP of INR 969 per share (previously: INR 985). However, we remain confident in the company’s ability to successfully execute its expansion plans, targeting 30.0 MTPA by FY26E and ongoing non-core asset monetization (INR 4,430 Mn realized toward INR 10,000 Mn target) to reduce interest costs. The government’s INR 11.2 Tn capex for FY26E and INR 1.5 Tn in 50-year interest-free loans should support cement demand and price recovery. Accordingly, we retain our “ACCUMULATE” rating on the shares of Ramco Cements Ltd.

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