The Ramco Cements Ltd. share price target

ICICI Securities Ltd | Retail Equity Research Ramco reported mixed set of Q3FY18 result. Revenues increased 12.0% YoY to | 1,056.4 crore (vs I-direct estimate of | 1,041.0 crore) led by 14.7% YoY increase in volumes to 2.3 MT (vs I-direct estimate of 2.2 MT) due to higher sales in eastern region. However, realisation declined 2.4% YoY (down 6.3% QoQ) to | 4,645 (vs I-direct estimate of | 4,849). EBITDA margin decreased 688 bps YoY to 22.3% (below I-direct estimate of 25.1%) due to 33.1% YoY increase in power & fuel cost...

Blended EBITDA/t declined 26% YoY/QoQ to INR1,001 (est. of INR1,264) due to cost push and lower realizations. Cost/t increased 8% YoY (1% QoQ) to INR3,631 (in-line) due to an increase in P&F cost/t (+16% YoY; higher petcoke prices) and freight cost/t (+11% YoY; increase in diesel prices). Hence, EBITDA stood at INR2.28b (-15% YoY) v/s our estimate of INR2.84b. Interest cost fell 39% YoY to INR160m due to debt reduction. Tax rate was lower at 23% v/s 27% in 3QFY17, restricting the decline in adj. PAT to 26% YoY (to INR1.1b).

Higher fuel cost and slowdown in Tamil Nadu continues to impact margins: The Ramco Cements (Ramco) posted 5% YoY growth in net sales to Rs1,066 crore during Q2FY2018. This was on account of a 6.3% YoY growth in cement volume and 1% YoY increase in the blended realization. The slowdown in Tamil Nadu, its key market due to drought and sand shortage...

Ramco cements number positively surprised us on profitability and on sales front on account better volumes posted by company and slight improvement in realizations. Net sales for company fell by 8% to 10293mn but it was better than our estimate of 9225mn. The company posted EBIDTA of 3016mn posting 15% fall and profit after tax of 1686 fall of 18% but better than our estimate of 1342mn. Higher costs affects profitability Increasing cost of raw material which are mainly in form of pet-coke, coal and diesel prices continue to affect profitability as these inputs account roughly 50% of total costs. The company has mentioned that benefits of low cost pet-coke inventory are already over and fuel cost should inch (up from 593/ton to...

Good show despite weak demand in south; Retain Buy We maintain our Buy rating on Ramco Cements (TRCL) and with a revised TP to Rs790. During Q2FY18, despite weak demand in Tamil Nadu and Kerala markets, TRCL delivered 6% YoY volume growth and unitary EBIDTA of Rs1229/MT (though down 21% YoY on its peak performance last year). We remain bullish on the company owing to strong demand outlook for AP/Telangana and east markets, and expected recovery in Tamil Nadu and Kerala markets. Despite weak demand in south, TRCL delivered 6% YoY volume growth: In...

Maintain NEUTRAL with a TP of Rs 690 (12x Sep-19 EV/EBITDA). We maintain our earnings estimates which factor in volumes/realisations/EBITDA CAGR of 2.4/4.7/5.7% respectively. Ramco Cements' numbers beat estimates (EBITDA/t: Rs 1,193/t, (20.9)/1.7% YoY/QoQ, Est 1,012). Both volumes (2.15 mT, 5.8% YoY, Est 2.07) and realisations (Rs 4,783/t, 0.3/3.8% YoY/QoQ, Est 4,492) beat estimates, driving the surprise. P&F; costs remained elevated (35.6/2.5% YoY/QoQ), given that pet-coke prices have risen sharply over last 2 to 3 quarters.

Volume growth driven by east: TRCL's volumes grew 6% YoY (flat QoQ) to 2.15mt in 2QFY18, driven by higher sales to east markets with the ramp-up of the Vizag unit. Volumes for south operations were impacted by weak demand from TN, partially offset by higher demand from AP/Telangana. Realization improvement led by favorable mix: Cement realization rose 4% QoQ to INR4,783/tonne (est. of INR4,507) due to a favorable market mix (tilted toward higher sales to south). Net sales grew 5% YoY (+5% QoQ) to...

Ramco's results were better than our expectations. Revenues increased 4.9% YoY to | 1,066.4 crore (above I-direct estimate of | 1,033.7 crore) led by 6.0% YoY increase in volumes due to higher sales in eastern...

Operating performance: Blended realization improved by Rs 280/ton (6%) QoQ at Rs 4,800/ton, as cement prices rebounded during Q1FY18. However, prices have come off during July 2017 across regions on weak seasonal demand.

Maintain NEUTRAL with a TP of Rs 690 (12.0x FY18/19 EV/EBITDA, USD200/T). Ramco Cements' numbers missed estimates (EBITDA/t: Rs 1,173/t, -11.5/8.8% YoY/QoQ, Est 1,380). Volumes (2.15 mT, 3.6% YoY, Est 2.28) and realisations (Rs 4,607/t, 1.4/3.5% YoY/QoQ, Est 4,628) reported misses. It also witnessed a sharp jump in its P&F; costs (up 25.6/26.7% YoY/QoQ), as its cheap petcoke inventory finally ran out.