Accumulate The Ramco Cements Ltd for Target Rs 925 by Elara Capital
Construction chemicals business ramps up
The Ramco Cements (TRCL IN ) reported an EBITDA of ~INR 3.2bn, ahead of our and consensus estimates of ~INR 2.6bn and ~INR 2.8bn, respectively. The QoQ decline in EBITDA per tonne has been the lowest in our cement coverage universe (for cement companies that have declar ed results so far ). While cement volume grew by 8% YoY, construction chemical volume grew by ~ 38% YoY and ~ 51% QoQ. Net revenue from the construction chemical business in the first 12 months of the launch stood at INR 3.9bn. However, net debt rose from ~ INR 36.6bn as of March 2026 to ~INR 39.2bn as of September 2026 . In the past two years upto Mar -26, the company has monetized ~ INR 11bn through the sale of non -core assets. Management is taking a ctive steps to dispose of the remaining identified non -core assets, valued at INR 1.5bn , in the near term. Of the identified INR 1.5bn, the company has realized INR 290mn in H1FY27. We reiterate Accumulate with an unchanged TP of INR 925 , based on 1 2x March 202 9E normalized EV/EBITDA
On path to reach 31mn tonne capacity by FY27:
TRCL completed debottlenecking at Jayanthipuram facility , adding 0.73mn tonnes , increasing its total capacity to 27.17mn tonnes. The company plans to reach ~31mn tonnes by FY 27 with the commissioning of Line - 2 at Kolimigundla. The 3.15mn tonne clinker unit and 15MW WHRS at Kolimigundla are expected to be commissioned by Q3FY27 . The company also plans to set up a 0.12mn tonne construction chemicals plant at Kolimigundla at a cost of INR 20 0mn by Q2FY28. It incurred a capex of INR 1 .97bn in Q2FY27 and has maintained its guid ance of INR 8bn for FY27 .
Improved realization partly mitigates cost pressures:
Cement sales volumes increased ~ 8% YoY and ~ 6% QoQ to ~4. 74mn tonnes despite disruptions due to monsoon in Kerala, Karnataka, Odisha and West Bengal. The construction chemicals volume has surged ~38% YoY and ~51% QoQ to ~0.204mn tonne s in Q2FY27. Blended r ealization improved 2% YoY and QoQ each to INR 5,188/tonne (cement realization up 1% Qo Q), led by a rise in premium product share in South (at ~32% in Q2FY27 vs . ~30% in Q2FY26 ). But operating cost/tonne rose 7% YoY and 3% QoQ to INR 4,507 , primarily led by ~37% YoY and ~7% QoQ jump in power & fuel cost . EBITDA/tonne declined 22% YoY and ~1% QoQ to INR 682, vs . our estimate of INR 536.
Maintain Accumulate with an unchanged TP of INR 925:
While rising power and fuel costs amid the ongoing conflict West Asia are likely to keep cost pressures elevated, an increase in the share of green power should help partly mitigate the impact. Further, improving demand is expected to support volume growth, while better pricing in its core East and South markets sh ould aid margin recovery , going ahead. T hus, we reiterate Accumulate.
We raise our EBITDA estimates by ~ 6% for FY27E, factoring in better pricing while retaining it for FY28 E -29E . Our TP stands unchanged at INR 925, based on 14x March 202 9E normalized EV /EBITDA. Sub -par demand, weak cement price and an extended period of high fuel price are key risks to our call.
Please refer disclaimer at Report
SEBI Registration number is INH000000933
