Stock of the Week : The Ramco Cements Ltd for Target Rs. 1172 - GEPL Capital
The Ramco Cements Ltd
Buy The Ramco Cements Ltd CMP 1085.5 Target 1172 Stop loss 1051
The Ramco Cements Limited’s main product is Portland cement, manufactured in eight state-of-the art production facilities that include Integrated Cement plants and Grinding units. The company is engaged in the manufacture of Cement, Ready Mix Concrete and Dry Mortar products.
Investment Rationale
* Operating Leverage Kicks In Amid Cost Optimisation: Despite a challenging demand environment, Ramco Cements has delivered a meaningful improvement in profitability, led by a 7% YoY increase in average cement prices and sustained focus on cost optimisation. EBITDA rose 22% YoY in 2QFY26, with EBITDA per tonne improving to Rs.866/T, supported by higher green power usage, lower fuel costs, and operational efficiencies. The company has shown sharp operating leverage, with PAT up ~191% YoY in 2QFY26 and cash profit growth of 38% YoY, despite only modest volume growth.
* Capacity Expansion on Track with Disciplined Capital Allocation: The company is on track to reach a total cement capacity of 30 MTPA by March 2026. This growth is supported by the commissioning of the second line at the Kolimigundla plant and the debottlenecking of existing facilities. To fund these capital expenditures and maintain financial health, TRCL is aggressively pursuing the monetisation of non-core assets; it has already realised Rs.501 Crores out of a targeted Rs.1,000 Crores. This disciplined approach to capital allocation is reflected in a 22% year-on-year increase in EBITDA for Q2FY26.
* Rapid Scaling of the Construction Chemicals Segment: The company has identified its Construction Chemicals business as a primary growth driver, aiming to scale its revenue from Rs.165 Crores in H1FY26 to Rs.2,000 Crores over the next four to five years. In August 2025, RAMCOCEM unveiled its new brand identity, "Hard Worker," which includes 20 specialised products such as tile adhesives and waterproofing solutions. This segment is already showing significant momentum, with sales volumes increasing by 72% in 2QFY26 compared to the previous year. Management plans to expand this product range panIndia to capture evolving needs in the construction sector.
* Valuations: We model a Revenue/PAT CAGR of 15%/24% and estimate RAMCOCEM to clock PAT of Rs 518 Cr by FY28E. RAMCOCEM is trading at forward P/E(x) of 49.4x and we value at 53.3(x) FY28E and Recommend BUY on RAMCOCEM with TP Price of Rs. 1,172 (8%).
Observation
* RAMCOCEM is displaying a constructive technical setup across multiple timeframes. On the monthly chart, the stock has shown a bullish mean reversion from the 12-month EMA for three consecutive months, with the current month sustaining above the prior month’s high—signaling improving strength.
* On the weekly scale, the stock is forming a base near the 50% Fibonacci retracement, which coincides with the 50-week EMA, highlighting strong demand at lower levels. The current week has also seen a volume expansion above the 20-week average, indicating increased participation.
* Additionally, the MACD has delivered a bullish crossover, further reinforced the positive outlook and suggesting scope for trend continuation.
* Given this robust alignment across multiple timeframes, the stock looks poised to advance toward an upside target of 1172, while a closing-basis stop loss at 1051 is advised to manage risk effectively.
Inference & Expectations
* Considering these factors, it can be inferred that RAMCOCEM stock is set to continue uptrend.
* Going ahead we expect the prices to move higher till 1172 level.
* The stop loss must be at 1051 level, strictly on the closing basis.
SEBI Registration number is INH000000081.
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