The Ramco Cements Ltd Research ReportQ3FY21

Ramco Cement’s operating performance was impacted marginally in Q3FY21 due to weak cement prices in south and east regions. Average realisations declined 10% QoQ though they remained healthy YoY (up 14%). Further, extended monsoon in south also impacted sales volume that declined 8.2% YoY to 2.61 MT (vs. I-direct estimate: 2.61MT). Cement capacity utilisation was at 56% vs. 61% last year while clinker utilisation was at 90%. EBITDA/tonne jumped 112% YoY to | 1,525/tonne (vs. I-direct estimate: | 1537/t), led by reduced cost of production (down 4.4% YoY to | 3624/t) and higher trade sales (90%). PAT improved 95.4% YoY to | 201.5 crore led by margin expansion and lower interest cost (average cost of debt down 110 bps YoY to 6.14%). The company has already commissioned 9 MW WHRS in Jayanthipuram. Another 18 MW would get commissioned by Q4FY21. Hence, the full benefit of 27 MW WHRS would be visible from Q1FY22E. With higher budgetary allocation (| 1.69 lakh crore out of | 2.27 lakh crore) for road and highway projects in the company’s key markets like Tamil Nadu, Kerala and West Bengal, we expect a healthy pick-up in the nonretail segment as well. We build in 23% and 20% sales volume growth for FY22E and FY23E, respectively, aided by new clinker and cement capacities.