Motilal Oswal's research report on The Ramco Cements
The Ramco Cements (TRCL)’s 2QFY23 performance missed our estimates on higher opex; though sales volume/realization beat our estimates. EBITDA was at INR1.8b (v/s est. INR2.2b) while blended EBITDA/t was at INR555 (v/s est. INR693). Net profit stood at INR115m (v/s est. INR466m) in 2QFY23. Continued rise in capex (guidance for FY23/24E now stands at INR17.2b/ INR8.9b v/s earlier guidance of INR8.6b/INR6.0b) is likely to result in higher debt going forward. We estimate TRCL’s net debt to be at INR51b/INR50b in FY23/FY24 (v/s earlier est. of INR41.1b/INR35.9b), respectively. We have cut our FY23/FY24 EBITDA estimates by 6%/3% on higher costs. Profit estimates are being reduced by 18%/22% for FY23/FY24 on higher interest/depreciation costs.
Outlook
We maintain our Neutral rating, valuing the stock at 12.5x Sep’24E EV/EBITDA (v/s 14x Mar’24E earlier).
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