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Beat estimates; higher realization/volume drive performance Strong volume growth; non-core asset monetization on track

* The Ramco Cements’ (TRCL) 2QFY27 performance was above estimates, led by higher-than-estimated volume/realization. EBITDA declined ~17% YoY to INR3.2b (38% beat). EBITDA/t declined ~23% YoY to INR653 (est. INR488). OPM dipped 4.2pp YoY to ~13% (vs. estimated ~10%). Adj. PAT was down 53% YoY at INR347m (vs. our estimated net loss of INR279m).

* Management indicated that sales volumes were significantly higher in the south region vs. east, which supported higher blended realization. Cement prices have increased across south and east regions in Oct’26. Fuel prices are significantly higher; hence, it is maintaining lower fuel inventory and awaiting correction in fuel prices before replenishing fuel inventory. Capacity is targeted to reach 31mtpa by Mar’27, with Kolimigundala Line2 and clinker unit expected by Dec’26.

* We increase our EBITDA estimates by ~13%/10% for FY27/FY28E, considering improvement in profitability. We value the stock at 13x FY28E EV/EBITDA to arrive at a TP of INR850. Reiterate Neutral.

Volume up ~9% YoY; realization/t up ~1% YoY (+3% vs. est.)

* Revenue/EBITDA/adj. PAT stood at INR24.6b/INR3.2b (+10%/-17% YoY and +6%/+38%) in 2QFY27. Adj. PAT declined ~53% YoY to INR347m (vs. est. net loss of INR279m). Sales volume grew ~9% YoY to 4.94mt (+3% vs. est.). Realization/t was up ~1% YoY/QoQ (each) at INR4,972/t (+3% vs. est.).

* Opex/t was up 6% YoY (~1% below estimates), led by 10%/7%/2% increase in variable cost/other/freight expenses per ton. Employee expenses/t declined ~3% YoY. OPM dipped 4.2pp YoY to ~13%, and EBITDA/t declined ~23% YoY to INR653. Depreciation increased ~4% YoY, while interest costs declined ~17% YoY. Other income was up ~7% YoY.

* In 1HFY27, revenue/EBITDA/PAT stood at INR47.3b/INR6.3b/INR568m (+10%/-20%/-65% YoY). OPM contracted 4.9pp YoY to ~13%. EBITDA/t declined ~27% YoY to INR659. OCF stood at INR2.7b vs. INR6.5b in 1HFY26. Capex stood at INR3.7b vs. INR6.0b in 1HFY26. Net cash outflow stood at INR1.0b vs. FCF at INR451m in 1HFY26.

Highlights from the management commentary

* Cement capacity utilization stood at 72% vs. 71%/70% in 2QFY26/1QFY27. Volume share from south stood at ~83% and from east at ~17%.

* Blended fuel consumption cost was USD140/t (INR1.99/kcal) vs. USD122/ USD127 (INR1.49/INR1.85 per kcal) in 2QFY26/1QFY27.

* Capex during 2QFY27/1HFY27 stood at INR2.0b/INR3.7b. FY27 capex guided at INR8b.

View and valuation

* TRCL’s operating performance was supported by higher cement volumes and improved realizations, alongside strong construction chemicals growth. Nearterm profitability is likely to remain impacted by high coal costs. Capacity expansion to 31mtpa by Mar’27, Kolimigundala commissioning and further noncore asset monetization remain key monitorables.

* We estimate a CAGR of ~11%/10%/37% in revenue/EBITDA/PAT over FY26-28. We estimate a volume CAGR of ~7% over FY26-28. Further, we estimate EBITDA/t of INR700/INR804 in FY27/FY28 vs. INR765 in FY26. Net debt is likely to decline to INR29.1b by FY28E from INR39.2b as of Sep’26, backed by disciplined capex and monetization of non-core assets. The net debt-to-EBITDA ratio is estimated to be 1.7x in FY28E vs. 3.1x as of Sep’26 (TTM).

* The stock is trading fairly at 15x/13x FY27E/FY28E EV/EBITDA. We value the stock at 13x FY28E EV/EBITDA to arrive at our TP of INR850. Reiterate Neutral.

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