South India-focused The Ramco Cements Ltd had a troublesome March quarter (Q4FY25). Cement gross sales quantity declined greater than anticipated by round 4% year-on-year to five.29 million tonnes.
The area has seen an elevated tempo of consolidation currently, and elevated competitors for market share positive aspects has saved cement costs beneath strain.
In reality, in line with Nomura World Markets Analysis, Ramco is the one main cement producer in its protection to report a decline in year-on-year volumes in Q4FY25; Ramco’s decline was as towards 5% year-on-year progress for the business.
“Blended realization (at ₹4,522 per tonne) got here in 4% beneath our estimate and was flat quarter-on-quarter, as towards a 3% enchancment quarter-on-quarter for the business,” added the Nomura report.
The Ramco administration stated that at the beginning of FY26, worth hikes of ₹30-35/bag within the commerce phase and ₹60-70 per bag within the non-trade phase had been applied within the south. If these maintain, there’s a scope of Ramco’s realisations to fix. Plus, elevated thrust on inexperienced vitality ought to assist the corporate handle working prices higher.
Right here, it’s value noting that the federal government of Tamil Nadu imposed a brand new levy – the mineral bearing land tax of Rs160 per tonne of limestone with impact from 4 April 2025. The administration expects this to lead to extra value implication of round Rs200 per tonne of cement produced in Tamil Nadu, the place Ramco has important publicity.
Cement producers in Tamil Nadu, by way of business affiliation, have represented to the federal government searching for aid, which is into consideration, it added.
Additionally Learn: UltraTech Cement set for increased volumes, tighter grip on prices
Decreasing debt
An organization-specific monitorable for Ramco is the tempo of debt discount. It’s comforting that Ramco is deleveraging by paring non-core belongings. Internet debt declined sequentially to ₹4,481 crore as of March 2025, aided by proceeds from the disposal of non-core belongings.
The corporate has monetized ₹460 crore to this point out of its focused ₹1,000 crore. The administration stated that it’s on observe to attain the goal of monetizing non-core belongings earlier than July as dedicated earlier. It expects the important thing internet debt-to-Ebitda ratio to ease to 2.50-2.75x in FY26 from 3.51x in FY25.
“We consider that current worth hikes and ongoing stability sheet deleveraging are key near-term catalysts that might assist the shares’ efficiency,” stated Motilal Oswal Monetary Companies Ltd report dated 23 Might.
Nevertheless, sustained profitability, disciplined capital allocation, and significant market share positive aspects might be essential structural drivers for a extra sturdy re-rating, it added. On this calendar 12 months to this point, the Ramco shares have given mere 3% returns.
Whereas efforts to cut back debt are encouraging, Ramco’s capital expenditure depth is prone to stay elevated because it provides extra capability. In FY25 Ramco’s capex stood at ₹1,024 crore and the administration guided for ₹1,200 crore capex for FY26.
Ramco is increasing its clinker and grinding capability by 3.2mtpa and 1.5mtpa respectively at Kolimigundla Line 2 in Andhra Pradesh. Mtpa is million tonnes each year.
It additionally plans debottlenecking and including grinding items at current amenities with minimal capital expenditure. Ramco goals to succeed in its capability goal of 30 mtpa by March 2026 from 24 mtpa at the moment.
An Vintage Inventory Broking report dated 23 March factors out that Ramco’s internet debt is prone to stay higher than ₹4,000 crore over FY25–27E even after factoring within the sale of non-core belongings value ₹1,000 crore.
“The Ramco Cements at the moment trades at round 11.9x FY27 estimated EV/Ebitda and $105 EV/ton. The inventory might proceed to commerce beneath its historic valuation given decrease than historic profitability and better leverage,” added the Vintage report. EV is enterprise worth.
Additionally Learn | Greatest cement shares 2025: Demand revival, pricing developments and progress prospects
