Motilal Oswal's research report on The Ramco Cements
The Ramco Cements (TRCL)’s 4QFY23 performance was above our estimates driven by higher volume and better cost control measures. EBITDA stood at INR4.1b (v/s est. INR3.0b), while blended EBITDA/t was at INR878 (v/s est. INR706). Net profit came in at INR1.5b (v/s est. INR690m) during the quarter. Management expects margin improvement from 2QFY24 due to reduction in fuel prices (spot petcoke price is at USD135/t v/s USD178/t in 4QFY23). Kurnool, AP expansion (Line II) will be prioritized over Karnataka Greenfield expansion, as land acquisition in Karnataka will take time while infrastructure is ready in Kurnool.
Outlook
We raise our EPS by 2%/6% for FY24E/FY25E. The stock trades at 15.3x FY24E EV/EBITDA. It has traded at an average EV/EBITDA of 15.5x/14.0x in the last 5/10 years. We maintain our Neutral rating with a revised TP of INR885, based on 12.5x FY25E EV/EBITDA (earlier Sep’24E EV/EBITDA).
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