Ramco Cements Share Price Target Raised – What Emkay’s Bullish Call Means
Emkay Research has initiated coverage on The Ramco Cements (TRCL) stock with an “ADD” rating and set a target price (TP) of Rs 1,090, valuing the stock at a FY27 estimated EV/EBITDA multiple of 13x.
The brokerage expects strong market consolidation in South India, where the share of the top five players is projected to rise sharply to 62% in FY26 from just 43% in FY24, supporting a favorable pricing environment for incumbent players like Ramco Cements.
The report states, “TRCL’s EBITDA is likely to grow at a CAGR of ~37% between FY25 and FY27, driven primarily by a ~5% CAGR in realisation.” Emkay expects the company’s net debt-to-EBITDA (ND/E) ratio to improve significantly from 3.6x in March 2025 to 2.5x and 1.6x in FY26E and FY27E, respectively, supported by operating cash flows of approximately Rs 35 billion over FY26-27.
Q4FY25 Earnings Miss Expectations Amid Rising Costs
Ramco Cements reported a below-par Q4FY25 performance, with EBITDA at Rs 3.2 billion—a 23% decline year-on-year and about 25% below consensus estimates.
Emkay attributed the miss mainly to a sequential increase of Rs 75 per tonne in raw material and power & fuel costs against their expectations of stable costs. Cement realization was flat and 1% lower than Emkay’s estimates, while volumes declined 4% YoY to 5.2 million tonnes.
Read More
Belrise Industries IPO: Check Latest GMP, Allotment Dates & Key Details
Management cited a marginal rise in blended fuel consumption costs, with prices expected to rebound strongly in South India in April and May 2025. Emkay notes, “Steep cement price increases in South India should support margins in Q1FY26 and beyond, with realisations rising by ~9% and ~2% YoY in FY26E and FY27E, respectively.”
Leverage to Improve on Restrained Capex, Watch for Return Ratios
Emkay highlights the company’s restrained capex program, estimating capex cash outflows of Rs 18 billion over FY26- 27, which will help generate free cash flow of around Rs 17 billion.
“Any significant rise in capex could keep net debt range-bound,” the report cautions. The firm expects return ratios to rise to approximately 10-11% by FY27 from mid-single digits currently.
The brokerage concludes, “We await a comfortable leverage scenario and higher return ratios before assigning a higher valuation multiple, with the long-term mean at 15x remaining a key monitorable.”
Disclaimer
The views expressed in this article are purely informational and Republic Media Network does not vouch for, promote or endorse any opinions stated by any third party. Stock market and Mutual Fund investments are subject to market risks and readers are advised to seek expert advice before investing in stocks, derivatives and Mutual Funds