Reduce The Ramco Cements; target of Rs 675: Prabhudas Lilladher

Prabhudas Lilladher recommended reduce rating on The Ramco Cements with a target price of Rs 675 in its research report dated November 03, 2020.

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November 06, 2020 / 16:51 IST

26 Aug, 2025 12:21

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Prabhudas Lilladher's research report on The Ramco Cements

The Ramco Cements (TRCL) posted Q2FY21 EBITDA 11%/45% above our and consensus estimates largely due to better than expected realisations. Realisations increased 4% QoQ/Rs215 against our estimate of 3.5%/Rs180/t QoQ fall. We are unexcited by the strong beat in realisations in light of underlying fall in prices and likely mismatch in recognition of discounts. We expect normalization in realisations in H2 with meaningful downside risk to heightened street expectations post the results. We remain negative on Southern region due to overcapacity and volatile demand pattern. Led by improved demand, increase in competition intensity to push volumes would affect prices and margins in H2FY21. Weakness in prices during October explains the same. Most importantly, TRCL’s earnings profile continued to deteriorate with increasing exposure to low margin and volatile markets of AP/Telangana and East regions.

Outlook

This is vindicated by narrowing gap on margins with its regional peers over last couple of years. Driven by expensive valuations and peaked out margins, we maintain Reduce rating with revised TP of Rs675 (earlier Rs660), EV/EBITDA of 13x FY22e.

For all recommendations report, click here