Buy The Ramco Cements; target of Rs 1135: YES Securities

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26 Aug, 2025 12:21

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YES Securities' research report on The Ramco Cements

The Ramco Cements (TRCL) reported better-than-expected EBITDA/te of Rs924 (beat YSEC est. of Rs774) due to higher-than-expected NSR of Rs5368/te (+2% than YSEC est.) and in-line total cost of Rs4444/te in Q4FY22. The extended monsoon and weak demand in the southern region resulted flat y/y volume growth to 3.2MT (miss of 9% to YSEC est.) translate in revenue of Rs17.1bn miss of 7% to YSEC est. in Q4FY22. For FY22, TRCL posted a volume growth of 11MT (+11% y/y; YSEC est. 11.3MT) with NSR rise of +3% y/y resulting in +14% revenue growth, however EBITDA decline by 17% y/y as operating cost surged by +26% y/y in FY22. The inflated fuel/diesel cost eroded the EBITDA/te to Rs1168 decline by 25% y/y in FY22, but sequential price hikes and anticipated cost normalization should uphold the EBITDA/te at +Rs1150 for FY23E. We trimmed our EBITDA/PAT est. by 30/40% and 16/21% for FY23/24E.

Outlook

We believe TRCL to generate healthy operating cash flow of Rs26.6bn and its fund ongoing capex (Rs8.5bn) also deleverage its B/S (10bn) over FY23-24E. This would aid TRCL to lower the Net Debt/EBITDA to 1.2x by FY24E v/s 2.8x FY22. Thus, we retain our BUY recommendation with a TP of Rs1135 (earlier Rs1188 on FY23E), valuing the stock at 15x EV/EBITDA on the FY24 estimates.

For all recommendations report, click here

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