Hold The Ramco Cements; target of Rs 780: Sharekhan

Sharekhan's research report on The Ramco Cements

The company positively surprised on cement volume growth of 22% y-o-y while disappointed on operational profitability which stood at multi year low at Rs. 383 EBITDA/tonne. Management ups volume growth guidance for FY2023 to 25-30% and expects 23% volume growth for FY2024. However, elevated power & fuel costs during H2FY2023 is expected to lead to weak operational profitability than earlier envisaged. It announced new brownfield grinding capacity of 0.9mtpa at Odisha at a capex of only Rs. 130 crores. Net Debt rise to over Rs. 4700 crore although not expected to significantly rise in H2FY2023.

Outlook

We downgrade The Ramco Cements Limited (Ramco) to Hold with a revised PT of Rs. 780 due to limited upside potential considering near-term headwinds.