Ramco Cement reported a remarkable performance at operating level in Q2FY21 with EBIDTA growing by 49.7% YoY & 70% QoQ, to Rs 4420 mn due to all-round decline in most expenses (except for employee costs). Sharp control in overheads and low-cost inventory of petcoke aided the decline in operating costs. EBITDA margin expansion of 1274 bps YoY & 1021 bps to 35.2% was mainly led by18.2% YoY rise in realisations. Hence, net revenue de-growth was contained at 4.5% YoY but rose by 20.2% QoQ to Rs 12,570 mn, despite sales volume de-growth of 18.8% YoY to 2.21 MT due to Covid...

New capacities to bring efficiency, spur growth in FY22E Incremental volumes coming up from additional capacities (2 MT already commissioned and 1 MT Odisha GU commissioned in September 2020, 1 MT GU Kurnool in FY22E) would help to grow ahead of industry growth in FY22E. Ramco is also commissioning the clinkering unit of 1.5 MT along with 9 MW WHRS in Jayanthipuram and 2.25MT clinkering unit in Kurnool before March 2021. Factoring this new capacity, we model 12.1% revenue CAGR in FY20-23E. While newly commissioned grinding units in Vizag, West Bengal,...

The Ramco Cements Ltd (TRCL) has reported extremely good set of numbers for 2QFY21 on the back of better realization and lower costs. Realization was surprisingly higher and was the key reason for a strong beat in the results against our as well as consensus numbers. Realization was up ~5% QoQ against our expectation of a 3% decline. We believe that higher realization was a result of relatively lower proportion of sales in the East and strong pricing in the South. TRCL has sold more material in Kerala and Tamil Nadu, which are relatively more remunerative than the company's other markets. Volume declined by 18.8% YoY to 2.21mn mt, which was lower than our estimate of 2.4mn mt. As a result, TRCL reported revenue at Rs12.6bn, down 4.5% YoY while...

We expect 9.3%/ 16.2%/ 15.8% revenue/ EBITDA/ PAT CAGR over FY20-23E led by -8.8%/ 17.0%/ 10.0% volume growth and 11.2%/ 0.0%/ 0.5% realization growth in FY21E/ FY22E/ FY23E. We introduce FY23E. We increase our revenue estimates by 5.5%/ 5.2% and EBITDA estimates by 37.2%/ 26.3% for FY21E/ FY22E factoring H1FY21 results. Accordingly, we increase our PAT estimates by 64.9%/ 42.3% for FY21E/ FY22E. We like TRCL for its strong distribution (supports its industry leading volume growth) and healthy profitability metrics...

The Ramco Cements reported standalone revenue decline of 25.0% QoQ (down 24.7% YoY) to INR 1,042 Cr in Q1FY21. The company's business operations were disrupted during Apr-20 due to lockdown imposed by the Government owing to COVID-19. After relaxation of restrictions by the Government, the business operations restored gradually and is continuing with weak demand in urban/semi-urban markets. EBITDA declined by 6.9% QoQ (down 27.6% YoY) to INR 260 crores in Q1FY21. EBITDA margin contracted by 101bps YoY to 25.1% in Q1FY21 from 26.0% in corresponding quarter last year, while on QoQ basis, EBITDA margin improved significantly by 487bps. Net profit in Q1FY21 declined 42.9% YoY to INR 110 crores, while on QoQ basis net profit declined 25.0%. Net profit margin for the...

The Ramco Cements Ltd ( TRCL), the flagship company of Ramco group is the 5th largest cement company in India with a total production capacity of 17.8MT (South-15.54MT & East-2.25MT). TRCL has captive Thermal power...

Pricing is better but costs deteriorate; downgrade to Sell We are downgrading The Ramco Cement Ltd (TRCL) to Sell from Accumulate as we believe that (1) current elevated pricing is unlikely to sustain (2) clinker shortages will lead to higher raw material costs and lower volume and (3) regional exposure to East and South is bound to result in volatile demand and pricing. The company has reported marginally good set of numbers for 1QFY21 on the back of better realisation. However, given that the stock is trading at 14.2x FY22 EV/EBITDA, we believe that investors should wait for a better entry opportunity, especially given the fact that EBITDA/mt is likely to fall for the next few quarters. For 1QFY21, the company reported revenue at...

expansion in the East and South, leading to its volumes growing 15% in FY22. Further, we expect net D/E to shrink to 0.4x in FY22 (from 0.6x in FY20) with delevering and greater profitability. We maintain a Buy rating, with a higher target price of `777 (earlier `748), based on 16x FY22e EV/...

FY20 has been a challenging year for the Indian cement industry. The industry produced 334.48 MTPA cement in FY20 vs. 337.32 MTPA in FY19, de-growth of 0.84% vs. 13.3% growth in FY19. Weak macro-economy and real estate sector along with liquidity crisis and lower credit flow resulted in subdued demand. The capacity utilisation of the industry declined to...

Ramco Cements' Q1FY21 numbers broadly remained above our estimates with better net profitability. The company reported a 24.6% YoY drop in revenues to | 1,048 crore (vs. I-direct estimate of | 934 crore). This was mainly led by 28.3% fall in sales volume during the quarter to 1.94 MT (vs. I-direct estimate: 1.8 MT) as the company's operation were impacted from mid-March due to imposition of lockdown. On the other hand, realisations remained better, increasing 5% YoY to | 5,408/tonne (vs. I-direct estimate: 5043/t). Total costs per tonne increased 6.6% YoY to | 4051/t. This was led...

Pace of work on expansion projects picked up as company maintained its timeline of commissioning barring Odisha unit The Ramco Cements (TRCL) posted Q1FY21 EBITDA in line with ours and above consensus estimates by 7%. While, PAT came below our estimates by 7% due to higher interest cost. We continue to remain negative on Southern region due to overcapacity as...

We broadly maintain our estimates for FY21E/ FY22E factoring Q1FY21 results. We like TRCL for its strong distribution (supports its industry leading volume growth) and healthy profitability metrics (despite turbulent south markets). Thus, we maintain Accumulate with a TP of...

These factors imply that 1QFY21 sales would decline ~20% YoY in the north and ~40% in the south. Cement prices mostly held up in June, bolstering 1Q realization YoY across the south (+11%), north (+6%), and central (+2%) India. West and east prices are down ~1% and 2% YoY respectively. We believe that falling energy costs could further cushion the impact of dwindling demand on profitability. Despite the ongoing COVID situation, cement demand recovered MoM in June, driven by strong traction in retail sales (semi-urban/rural areas) while non-trade sales continued to decline. Our channel checks suggest sales in north/central/east regions printed flattish to marginal growth. Even in the south and west India, the volume decline rate moderated to ~20-30% YoY in June vs ~40% in May.

For Q1FY2021, The Ramco Cements (Ramco) reported better-than-expected performance on all fronts. The company's standalone revenue stood at Rs. 1,042 crore, down 24.7% y-o-y, which was led by a decline of 28.3% y-o-y in cement volume affected by COVID-19 led nationwide lock down in April 2020. The blended realization was up 5.8% y-o-y (up 10.6% q-o-q) led by a steep increase in cement prices in the southern region. The company also performed better on operational front with EBITDA/tonne at Rs. 1161 (up 3.7% y-o-y) which was aided by higher realization along with lower power & fuel costs (down 20.8% y-o-y on per tone basis). However, adjusting for the ESOPs...

For Q1FY2021, The Ramco Cements (Ramco) reported better-than-expected performance on all fronts. The company's standalone revenue stood at Rs. 1,042 crore, down 24.7% y-o-y, which was led by a decline of 28.3% y-o-y in cement volume affected by COVID-19 led nationwide lock down in April 2020. The blended realization was up 5.8% y-o-y (up 10.6% q-o-q) led by a steep increase in cement prices in the southern region. The company also performed better on operational front with EBITDA/tonne at Rs. 1161 (up 3.7% y-o-y) which was aided by higher realization along with lower power & fuel costs (down 20.8% y-o-y on per tone basis). However, adjusting for the ESOPs...

Ramco Cement reported weak set of numbers in Q4FY20 with fallen annual figures but a solid growth sequentially. The standalone topline degrowth was at -9.3% YoY/8.8% QoQ to Rs 13,899 mn, EBITDA for the quarter fell by 14.1% YoY/37.6% QoQ to Rs 2,792 mn and Net Profit stayed at Rs 1,462 mn, down 11.6% YoY/up 54.2% QoQ. EBITDA margin for the quarter contracted sharply by 113 bps at 20.1% for Q4FY20, primarily due to higher sales and promotion expenses incurred by the company during the quarter and negative operating leverage caused by the COVID-19-led shutdown that marred sales during the last week of March. Realisation for the quarter...

The Ramco Cement Ltd (TRCL) has reported good set of numbers for 4QFY20, in line with Click Here Momentary better demand and pricing in East bode well other peers in the sector. Revenue at Rs13.9bn declined by 9.3% YoY as volume declined by 10.9% YoY whereas realization improved by 1.8% YoY (5.5% QoQ). Operating cost/mt increased by 3.2% YoY due to higher raw material, employee and other expenses, which was offset by lower power & fuel and freight costs. As a result, EBITDA/mt came in at Rs952, which was down by 3.6% YoY and up by 33.5% QoQ and much ahead of our estimate. Adj. PAT at Rs1.46bn declined by 11.2% YoY. For FY20, the company reported 0.7% increase in...

New capacity to cushion fall in FY21, spur growth in FY22 The company posted 4.7% YoY growth, mainly led by a strong H1 followed by a sluggish H2. Amid the ongoing pandemic situation, we expect demand to broadly remain weak in H1, with a gradual recovery expected from Q3 onwards. FY20 would be a washout year for cement companies. Negative topline growth was due to weak volume. FY22 should see strong growth, led by demand recovery and a weak base. In Ramco Cement's case, while it would also see lower volumes, incremental volumes coming up from...

We increase FY21/22E EBITDA est by 4% each factoring in cost tailwinds. We continue to value it at 12x FY22E EBITDA (~10 year mean), implying TP of Rs 685. As post the recent 30% run-up, the stock is trading at rich valuation, offering limited upside, we downgrade its rating to ADD from BUY earlier. We downgrade Ramco Cements to ADD from BUY earlier, as the sharp 30% stock price recovery in the past two months, limits upside on our TP of Rs 685 (12x FY22E EBITDA). Covid impact drove 11% vol decline in 4Q, leading to 9/14/13% fall in Rev/EBITDA/APAT. This slowed FY20 Rev/EBITDA/APAT growth to 4/10/18% YoY. As capex spend in FY20 spiked up towards ongoing expansions in east/AP, its net debt doubled and net Debt/EBITDA soared to 2.6x vs 1.4x YoY. This should cool off in FY22, once the expansions get completed by early FY22E. Avg int rate remains competitive at ~7.34%.