Motilal Oswal's research report on The Ramco Cements
TRCL’s 2QFY25 earnings beat our estimates, aided by lower-than-estimated opex/t (6% below our estimate). EBITDA declined ~22% YoY to INR3.1b (~26% beat) and EBITDA/t declined 20% YoY to INR695 (est. INR584). OPM dipped 1.8pp YoY to ~15% (est. ~12%). PAT declined 75% YoY to INR256m (vs. estimated loss of INR134m). The company is focusing on non-core asset monetization and has monetized non-core assets worth INR3.8b as of Oct’24 out of the targeted value of INR10b by Jun’25. It has also entered into an agreement to sell land worth INR740m, which is expected to be realized during 3QFY25. TRCL reiterated its capacity target of 30mtpa by Mar’26.
Outlook
Despite the earrings beat in 2Q, we largely maintain our earnings estimates for FY25-27 due to pricing pressure in the company’s core market (south) and higher competition in the near term in south region due to capacity expansion by leading players. We value TRCL at 12x Sep’26E EV/EBITDA to arrive at a TP of INR880. We reiterate our Neutral rating on the stock.
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