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EBITDA above estimate due to higher realization/t Strong volume growth; non-core asset monetization on track

* The Ramco Cements’ (TRCL) 1QFY27 revenue rose ~10% YoY to INR22.7b (~5% beat led by higher volume and realization/t vs. our estimates). EBITDA declined ~23% YoY to INR3.1b (~8% beat). EBITDA/t declined ~31% YoY to INR666 (vs. est. of INR639). OPM contracted 5.7pp YoY to ~14% (vs. estimated ~13%). Adj. PAT declined 74% YoY to INR222m (2.1x above our estimates).

* Cement volume rose ~12% YoY in 1QFY27 despite demand disruption in key markets due to state elections. Over the past two years, the company has monetized INR11.0b through the sale of non-core assets. It continues to actively divest the remaining identified non-core assets worth ~INR1.5b, of which INR240m was realized during 1QFY27. It plans to achieve cement capacity of ~31mtpa (from 26.4mtpa) through debottlenecking of existing integrated units and brownfield expansion at Kolimigundala, Andhra Pradesh, during FY27.

* We maintain our EBITDA estimates for FY27/FY28E. We value the stock at 13x FY28E EV/EBITDA to arrive at a TP of INR900. Reiterate Neutral

Volume up ~12% YoY; realization/t down ~2% YoY (+1% vs. est.)

* Revenue/EBITDA/adj. PAT stood at INR22.7b/INR3.1b/INR222m (+10%/23%/-74% YoY and +5%/+8%/+2.1x vs. our estimates) in 1QFY27. Sales volume grew ~12% YoY to 4.62mt (+4% vs. estimates). Realization/t was down ~2% YoY (up 5% QoQ) at INR4,917/t (+1% vs. est.).

* Opex/t was up ~5% YoY (in line), led by a 6%/8%/2% increase in variable cost/other expenses/freight cost per ton, while employee expenses/t declined ~5% YoY. OPM contracted 5.7pp YoY to ~14% and EBITDA/t declined ~31% YoY to INR666. Depreciation increased ~4% YoY, while interest costs declined 9% YoY. Other income was up ~11% YoY.

* Net debt stood at INR39.4b as of Jun’26 vs. INR36.6b as of Mar’26. The cost of debt stood at 7.03% vs. 7.64% in 1QFY26.

Highlights from the management commentary

* Cement capacity utilization stood at ~70% vs. ~68%/~83% in 1Q/4QFY26. Cement volume was up ~12% YoY at 4.5mt in and construction chemical volume grew ~13% YoY to 0.14mt.

* Blended coal consumption cost was USD127/t (INR1.85/kcal) vs. USD126/USD120 (INR1.55/INR1.62 per kcal) in 1QFY26/4QFY26.

* Capex during the quarter stood at INR1.8b, with FY27 capex guided at INR8b.

View and valuation

* TRCL’s operating performance was above our estimates, led by higher volumes and better realization/t. We expect profitability to remain impacted in the near term due to continued cost pressure. The company’s capacity expansion plans and volume growth remain key monitorables.

* We estimate a CAGR of ~9%/13%/51% in revenue/EBITDA/PAT over FY26-28. We estimate a volume CAGR of ~7% over FY26-28. Further, we estimate EBITDA/t of INR705/INR850 in FY27/FY28 vs. INR765 in FY26. Net debt is likely to decline to INR27.0b by FY28E from INR36.3b in FY26, supported by disciplined capex and monetization of non-core assets. The net debt-to-EBITDA ratio is estimated to be 1.5x in FY28E from 2.5x in FY26.

* The stock is currently trading fairly at 17x/13x FY27E/FY28E EV/EBITDA. We value the stock at 13x FY28E EV/EBITDA to arrive at our TP of INR900. Reiterate Neutral.

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