The Ramco Cement - Q2FY21 Result Update - ICICI Securities

Ramco Cement reported a remarkable performance at operating level in Q2FY21 with EBITDA margin expansion of 1267 bps YoY to 35.3% led by 17.7% YoY rise in realisations. Hence, net revenue de-growth was contained at 4.4% YoY to Rs. 1266 crore (I-direct estimate: Rs. 1266 crore) despite sales volume de-growth of 18.8% YoY to 2.21 MT due to Covid related business restrictions and monsoon. Capacity utilisations for the quarter were at 47.5% vs. 58.5% last year, 41.6% last quarter. EBITDA/tonne recorded a jump of over 83.5% YoY to Rs. 2021/tonne (highest among all companies so far). Improved sales of premium products also contributed to healthy realisation. Further, blended cost of productions were also down 1.6% YoY, 8.7% QoQ to Rs. 3699/tonne due to lower fuel costs, improved blending ratio. Among costs, fuel & freight cost was down 17.3%, 3%, respectively, YoY while raw material cost QoQ saw a dip of 27%. This led to EBITDA growth of 49.1% YoY to Rs. 447.3 crore with EBITDA margin of 35.3% vs. I-direct estimate of 24% (up 1267 bps YoY). However, net profit grew slightly lower at 40.5% YoY to Rs. 238.9 crore (I-direct estimate: Rs. 156.7 crore) due to higher interest on account of debt funded capacity expansion.

Valuation & Outlook

Long history of operations, brand equity, low cost producer and a healthy B/S are factors that helped the company to raise debt at competitive rates. We expect these factors to drive robust performance in future as well. We maintain our BUY rating, valuing the company at 12x FY23E EV/EBITDA. We arrive at a target price of Rs. 1000/share (ie EV/t of $175).

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_RamcoCement_Q2FY21.pdf

Shares of The Ramco Cements Limited was last trading in BSE at Rs.835.15 as compared to the previous close of Rs. 827.9. The total number of shares traded during the day was 24611 in over 1445 trades.

The stock hit an intraday high of Rs. 840 and intraday low of 821.9. The net turnover during the day was Rs. 20427314.

Source : Equity Bulls

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