Below is the View On the 4QFY18 Result: FIRST CUT for Ramco Cements by Binod Kumar Modi Sr. Research Analyst Reliance Securities
We continue to believe that RCL is likely to gain further traction ahead led by; a) cost leadership, b) consistent de-leveraging of balance sheet, c) strong brand equity, d) likely improvement in its utilizations further led by demand revival in TN , and e) better than industry’s return ration. However, current valuations appear to be at pricey. We will come out with a detailed note soon.
* Ramco Cements (RCL) has reported 12% YoY (+18% QoQ) growth in EBITDA in 4QFY18 to Rs2.68bn, which is ahead of our estimate of Rs2.25bn. A higher than estimated sales volume is the key reason of higher EBITDA.
* EBITDA/tonne came in at Rs979 v/s Rs1,052 and Rs996 in 4QFY17 and 3QFY18, respectively.
* Operating cost/tonne stood at Rs3,586 (+5.5% YoY and -0.7% QoQ). Sequential decline is mainly on account of higher utilisation led savings. Power & fuel cost and freight cost stood at Rs805 (+20% YoY and -2% QoQ) and Rs1063 (+17.9% YoY and +6.9% QoQ). Further, average realisation/tonne stood at Rs4,565 (+2.6% YoY and -0.9% QoQ).
* Sales volume improved substantially by 20% YoY and 21% QoQ to 2.74mnT mainly on account of higher contribution from Eastern markets and gradual revival in TN markets.
* Finance costs declined further to Rs105mn (-48% YoY and -35% QoQ). However, higher tax provisions (adjusted of prior periods) led to PAT decline of 19% YoY and 12% QoQ to Rs1.09bn as against our estimate of Rs1.19bn.
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