FOREX
Ramco Cements stock gains 5% as Q2 results beat street estimates
Ramco Cements stock surged on Tuesday following its Q2 results, despite recording a 64.2 per cent decline in its consolidated net profit to ₹25.77 crore for the second quarter ended September 2024 due to weak demand and lower cement prices.
The company raised ₹376 crore over the past two months from the sale of non-core assets and aims to raise an additional ₹74 crore through further asset monetisation.
In addition, the Ramco Industries board has approved investment through the purchase of shares of The Ramco Cements Limited in one or more tranches, with a value of up to ₹160 crore.
Brokerages were distinct on Ramco Cements despite the earnings beat in Q2. Global brokerage Jefferies has given an underperform rating and slashed the target price to ₹680 from ₹690.
Motilal Oswal has reiterated a neutral call on the stock at a target price of ₹880. The brokerage has largely maintained earnings estimates for FY25-27 due to pricing pressure in the company’s core market and higher competition in the near term in the South region due to capacity expansion by leading players.
Analysts of HDFC Securities observed that the margins surprised positively and have maintained ‘add’ rating on the stock at an unchanged target price of ₹860 apiece. They estimate a cumulative capex of ₹5,000 crore during FY25-27E. “Despite factoring in ₹1,000 crore (₹10 billion) in non-core asset monetisation, net debt to EBITDA would gradually moderate to 2.4x in FY27E,” they added.
Meanwhile, Elara Securities mentioned that Ramco Cements has documented mixed Q2 with broadly in-line net sales but EBITDA ahead of consensus estimates on the back of lower-than-expected operating costs.
The brokerage has cut EBITDA by 19 per cent for FY25E, 7 per cent for FY26E and 3 per cent for FY27E, to factor in weakness in cement prices. Elara cited sub-par demand, weak cement price and a sharp rise in fuel prices as key reasons for its stance. It has reiterated accumulate rating at an unchanged target price of ₹929.
Shares of Ramco Cements gained nearly 6.4 per cent to trade at the day’s high of ₹927 on the NSE from its previous close at ₹870.45. The stock closed at ₹909.80 on Tuesday, higher by 4.52 per cent. On the BSE, the stock closed at ₹910.25, increased by 4.63 per cent.
