Q3FY21 Result Update - The Ramco Cement - ICICI Direct

Ramco Cement's operating performance was impacted marginally in Q3FY21 due to weak cement prices in south and east regions. Average realisations declined 10% QoQ though they remained healthy YoY (up 14%). Further, extended monsoon in south also impacted sales volume that declined 8.2% YoY to 2.61 MT (vs. I-direct estimate: 2.61MT). Cement capacity utilisation was at 56% vs. 61% last year while clinker utilisation was at 90%. EBITDA/tonne jumped 112% YoY to Rs. 1,525/tonne (vs. I-direct estimate: Rs. 1537/t), led by reduced cost of production (down 4.4% YoY to Rs. 3624/t) and higher trade sales (90%). PAT improved 95.4% YoY to Rs. 201.5 crore led by margin expansion and lower interest cost (average cost of debt down 110 bps YoY to 6.14%). The company has already commissioned 9 MW WHRS in Jayanthipuram. Another 18 MW would get commissioned by Q4FY21. Hence, the full benefit of 27 MW WHRS would be visible from Q1FY22E. With higher budgetary allocation (Rs. 1.69 lakh crore out of Rs. 2.27 lakh crore) for road and highway projects in the company's key markets like Tamil Nadu, Kerala and West Bengal, we expect a healthy pick-up in the non-retail segment as well. We build in 23% and 20% sales volume growth for FY22E and FY23E, respectively, aided by new clinker and cement capacities.

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 the future as well. We maintain our BUY rating with a revised target price of Rs. 1100/share (valuing the company at 15x FY23E EV/EBITDA) (earlier TP Rs. 1000).

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_RamcoCement_Q3FY21.pdf

Shares of The Ramco Cements Limited was last trading in BSE at Rs.871.1 as compared to the previous close of Rs. 867.5. The total number of shares traded during the day was 48639 in over 1876 trades.

The stock hit an intraday high of Rs. 897.3 and intraday low of 860.95. The net turnover during the day was Rs. 42719218.

Source : Equity Bulls

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