The 18 reports from 7 analysts offering long term price targets
for The Ramco Cements Ltd. have an average target of 794.29. The consensus estimate
represents an upside of 1.77%
from the last price of 780.50.
We estimate TRCL to deliver 23.8% EBITDA CAGR during FY19-21E. TRCL is prudently expanding its cement capacity by 25% over next two years, funded mainly through its strong internal accruals. While TRCL remains a regional player, we ascribe it premium valuations of 13x EV/EBITDA (for its strong retail presence and robust profitability metrics) on FY21E standalone EBITDA, leading to TP of Rs 800/share (implies EV/MT of USD Rs 170). As the stock is fairly valued, we maintain Neutral rating on the stock. We retain NEUTRAL rating with TP of Rs 800 (13x FY21 EBITDA). Our TP implies EV/MT of USD 170/MT.
Strong capacity addition lined up; leverage to remain stable Ramco has a pipeline of 6.2 MT of cement capacity to be commissioned over FY20E and FY21E (refer exhibit 4). During FY20E, 2 MT of capacity in the East (West Bengal, Odisha) and 1 MT in South (Vizag). Rest of the capacities would be coming in FY21E along with 3.75 MT of clinker capacity addition (greenfield and brownfield). These projects would be completed at a cost of ~| 3430 crore out of which | 1200 crore has already been spent in FY19. Over two years, the balance would be spent for which we believe some debt...
Meets Expectations; Long-term Business Strategy In Place The Ramco Cements' (TRCL) operating performance in 4QFY19 was in line with expectations as the company focused on maximising its reach (into eastern region) by pushing up volume but foregoing realisation gains. Revenues grew by a healthy 22% to Rs15.3bn (78% capacity utilisation in 4QFY19) driven by volume growth of 20% YoY as it expanded its access in the eastern region (contributing 25% to volume). However, this meant that realisation was lower than expectation with 1% growth at Rs4,618/tn in 4QFY19 (our estimate Rs4,828/tn). Costs continued to remain firm because of higher energy costs and other expenditure (Rs2.05bn, largely because of non-recurring expenses). Logistic costs declined marginally YoY...
Profitability restricted by higher cost: Blended EBITDA/t was down 1% YoY to INR979, with cost/t increasing 2% YoY to INR3,670. However, EBITDA grew 20% YoY to INR3.2b (in-line) due to volume gains. Margin contracted 0.5pp YoY to 21.1%. Adj. PAT was up 22.5% YoY to INR1.68b (in-line). FY19 performance: Volumes grew ~19%, sales increased 17% to INR51.2b, while EBITDA/PAT was down 5%/9% YoY to INR10b/INR5.1b. Key highlights from management interaction: (1) Average diesel prices increased 17% YoY in FY19, leading to higher logistics cost. (2) Petcoke prices...
at par with existing operations backed by highly competitive logistics (WB) and Vizag (AP) units. Ongoing capacity addition in Eastern region are network and blending advantage. Led by improvement in prices, we upgrade...
ICICI Securities Ltd | Retail Equity Research Ramco Cements' Q3FY19 results were a mixed bag. Revenues increased 14.6% YoY to | 1,210.4 crore (below I-direct estimate of | 1,241.5 crore) mainly driven by volume growth of 20.8% YoY to 2.75 MT (above I-direct estimate of 2.65MT). Blended realisations were at | 4406/t (below I-direct estimates: | 4686/t), down 5.1% YoY EBITDA margins declined 460 bps YoY to 17.7% (vs. I-direct estimate of 20.8%) due to ~31% YoY increase in power & fuel cost per tonne to...
The Ramco Cements' (TRCL) operating performance in 3QFY19 was hit with a double whammy as realisation declined and cost reduction was deferred. Strong volume growth, however, was Sector: Cement maintained. Volume grew ~21% YoY to 2.75mnmt (below our estimate of 2.86mnmt) driven by steady recovery in TRCL's key markets like Tamil Nadu (TN) and healthy demand from eastern region. CMP: Rs574 Realisation, however, declined ~4.4% YoY to Rs4,378/tn because of the price pressure across its operating regions (southern and eastern regions). Cost continued to remain firm contributed by high Target Price: Rs659 cost fuel inventory (low cost benefits to be reflected from 4QFY19) and higher other expenditure at Rs1.65bn. With the double impact of cost inflation and realisation decline, EBITDA margin fell 340bps Upside: 15%...
Admittedly, cement prices have bottomed-out given the wafer thin margins. We do expect gradual improvement in prices in the current quarter. However, continuous capacity addition in the region, high aspiration of players to increase market share in rising demand environment and poor mix of demand inclined towards highly competitive and low margin Non-trade segment would keep prices under pressure for prolonged period. Led by weaker outlook on prices and rising share of volumes from low margin regions, we cut our earnings estimates by 3%/4% for FY20e/FY21e. Despite steep fall in...
Cement realizations at INR4,392/t (-5% YoY, -5% QoQ) were below our estimate of INR4,542/t due to lower prices in focus 29 January 2019 INR11.4b). Revenue from wind stood at INR9m. Cost/t remained flat YoY (-4% QoQ) at INR3,627 (our prices) and freight cost/t (+2% YoY, led by higher diesel prices) were offset by lower raw material costs/t. Power segment reported EBITDA loss of INR44m in 3QFY19, while Cement EBITDA/t stood at INR784 (-21% YoY/-8% QoQ). Hence, at 17.5% (-4.1pp YoY, -3.2pp QoQ). Adj PAT came in at INR1.01b (-8.4%YoY) as against est. of INR959m as 3QFY18 had extraordinary income of INR 124m related to reversal of provisions for DMF and tax for earlier years.
Capacity Expansion To Boost Its Presence In Andhra & Telangana BUY The Ramco Cements (TRCL) has announced 3.15mt cement capacity greenfield expansion in Kurnool district of Andhra Pradesh (AP) in South India. This is in addition to the satellite grinding units that will be commissioned in FY20 (see details below). The integrated unit in Kurnool will have a clinker capacity of 1.8mt. This will help TRCL in addressing the clinkerconversion mismatch and also boost its presence in the strong markets of AP and Telangana. TRCL is addressing its key power requirement for the new capacity by adding 18MW captive power unit and ~20MW of waste heat recovery system. Further, the unit is backed by a railway siding that will help control logistics cost. TRCL is progressing smoothly in commissioning its...
Ramco reported a good set of Q2FY19 numbers. Revenues increased 11% YoY to | 1,183.5 crore (above I-direct estimate of | 1,122.9 crore) mainly driven by double digit volume growth of 14.7% YoY to 2.47 MT (slightly above I-direct estimate of 2.4 MT) due to higher sales in the eastern region while realisations stayed weak (down 3.3% YoY to | 4794/t) due to monsoon but were better than our estimates of | 4,684/t) With better-than-expected realisations, the company managed to clock...
regions. However, weakness in realisations continues due to demand from low margin non-trade segment and intense rivalry. Series of capacity addition in the region and high aspiration of players to increase market share in rising demand environment would continue to keep prices under pressure for prolonged period. Led by highly efficient operations, TRCL remains the best play in Southern region. However, the weaker prices and higher costs would continue to keep earnings under...
The Ramco Cements (TRCL) reported a stable operating performance driven by steady realisation (marginal decline), despite strong volume growth. Revenues grew ~19% YoY to 2.61mnmt (above our estimate of 2.47mnmt) driven by healthy demand from the eastern region and recovery in TRCL's key markets like Tamil Nadu (TN). Realisation marginally declined by ~1.5% YoY to Rs4,537/tn, despite strong volume growth because of the judicious sales mix in core markets and new regions. Cost escalation because of higher energy and logistics costs contributed to operating cost inflation of ~10% YoY at Rs3,709/tn. Limited pass- through led to EBITDA margin compression of 771bps YoY (partially because of a higher base) to 20.5% YoY....
Ramco reported mixed Q1FY19 results. Revenues increased 18.6% YoY to | 1219.9 crore (vs. I-direct estimate: | 1178.9 crore) led by 21.4% YoY increase in volumes to 2.6 MT (vs. I-direct estimate: 2.5 MT) due to higher sales in the eastern region while realisations remained weak, down 2.3% YoY to | 4674/t (vs. I-direct estimate: of | 4,667) EBITDA/t declined 29% YoY to | 959/t (vs. I-direct estimate: | 1,033/t)...
Weakness in realisations further aggravated the slide in margins. Price hike undertaken in last couple of months would help TRCL to expand the margins from Q1 levels. However, given the high price levels in Tamil Nadu and Kerala and high competitive intensity in AP and Telangana, price hikes would fail to outpace the increase in costs. In this backdrop, we cut our earnings estimates for FY19e/FY20e estimate by 23%/15%. Led by highly efficient operations and strong B/S, TRCL remains the best play...
RCL's revenue grew by a healthy 20% YoY (-5% QoQ) to Rs11.9bn led by 22% YoY growth in sales volume to 2.61mnT (including exports of 0.04mnT) owing to higher contribution from the Eastern markets and gradual traction in TN markets since last couple of months. Looking ahead, we...
ICICI Securities Ltd | Retail Equity Research Ramco reported a mixed set of Q4FY18 numbers. Revenues increased 22.3% YoY to | 1,254.8 crore (vs. I-direct estimate of | 1,206.5 crore) led by 20.2% YoY increase in volumes to 2.7 MT (vs. I-direct estimate of 2.6 MT) due to higher sales in eastern region. Further, realisation increased 1.8% YoY to | 4,586 (vs. I-direct estimate of | 4,710) EBITDA/t declined 16.4% YoY to | 995/t (vs. I-direct estimate of...
Cost Control Prevents Sharp Operating Performance Decline The Ramco Cements (TRCL) reported a healthy operating performance for 4QFY18 driven by strong cost control. Revenues grew on account of volume pick-up of ~20% YoY to 2.74mnmt (above our estimate of 2.62mnmt) backed by strong demand from the eastern region that offset the weakness in TRCL's key markets like Tamil Nadu. Realisation improved ~3% YoY to Rs4,571/tn assisted by better pricing in TRCL's home market. Overall, revenues grew ~23% YoY to Rs12.5bn (above our estimate of Rs11.8bn). Operating costs rose ~8.5% YoY to Rs3,556/tn mainly because of energy and logistics costs. Limited pass-through because of weakness in key home markets like Tamil Nadu...
