Hold The Ramco Cements; target of Rs 988: Deven Choksey

Deven Choksey's research report on The Ramco Cements

Revenue stood at 23,973 Mn., down 10.5% YoY (+20.9% QoQ), below our estimates (-12.7%), led by lower volume offtake. EBITDA came in at INR 3,192 Mn; down 23.8% YoY (+14.4% QoQ) led by contraction of EBITDA margin by 233bps YoY to 13.3% (-75bps QoQ), driven by higher operational expenses and lower gross margins. Adjusted net profit stood at INR 166 Mn., down 87.2% YoY (-367.4% QoQ) led by poor operational performance. Net margin contracted by 413bps YoY (+100bps QoQ) to 0.7%. We have revised our FY26E/FY27E EBITDA by -1.6%/-4.3%, respectively, as we bake in weaker earnings performance and a more gradual uptick in utilization. The company has monetized INR 4,600 Mn worth of non-core assets and remains on track to achieve its INR 10,000 Mn monetization target by July 2025E, which will support its deleveraging efforts, amid capacity expansion on schedule, with a target of 30.0 MTPA by FY26E.

Outlook

We value Ramco Cements at 13.5x FY27E EBITDA, implying a target price of INR 988. We believe that the recent price hikes are largely priced in, and the risk-reward appears balanced. Accordingly, we downgrade our rating from “ACCUMULATE” to “HOLD” on the stock.

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