Hold The Ramco Cements; target of Rs 990: Emkay Global Financial

Emkay Global Financial's research report on The Ramco Cements

The Ramco Cements reported healthy operational performance in Q2FY24, with EBITDA coming 21-22% higher than Street/our estimates. EBITDA increased 2x YoY/17% QoQ to Rs4bn, with EBITDA/t of Rs865. Volume growth of 39% YoY was robust at 4.6mt (Emkay est: 4.2mt). Overall cost/t declined 14% YoY/5% QoQ to Rs4,188, with the major part of savings owing to lower RM+P&F costs (down Rs201/t QoQ). Net debt further increased by Rs6bn QoQ to Rs50bn, as capex intensity saw a significant rise in H1FY24 (Rs12.5bn; also includes the land-acquisition deal from Prism Johnson).

Outlook

Adjusting for the higher capex, we expect net debt to broadly track a similar range till FY25. Building-in the Q2 beat and recent price-hike, we raise FY24E-26E EBITDA by 2% and revise Sep-24E TP to Rs990/sh, based on 13x EV/E (earlier 12x); retain HOLD.