Citi has maintained its ‘Buy’ rating on Ramco Cements with a target price of ₹1,140, despite a disappointing Q4FY25 performance. The brokerage believes near-term earnings pressure is likely to ease as regional price hikes take effect and the company monetises non-core assets to strengthen its balance sheet.
Ramco Cements reported a sharp 74.5% YoY decline in net profit to ₹31 crore in Q4FY25, while revenue fell 10.5% YoY to ₹2,392 crore. EBITDA declined 23% YoY to ₹320.8 crore, with operating margin narrowing to 13.4% from 15.6%. According to Citi, EBITDA/t stood at ₹620, down from ₹655 in Q3 and ₹770 a year ago.
The decline was driven by a 4% drop in volumes and 7% fall in realizations, partially offset by a 5% reduction in costs. For FY25 as a whole, EBITDA declined 21% YoY to ₹1,230 crore, with realizations falling 10% YoY, despite flattish volume growth.
However, Citi sees positives on the horizon. Ramco has already implemented price hikes of ₹30–35/bag in the trade segment and ₹60–70/bag in the non-trade segment in southern India as of April–May. Prices in eastern India are also trending higher. Additionally, the company is targeting a reduction in net debt/EBITDA to 2.5–2.75x from the current 3.5x, aided by earnings recovery and the planned monetisation of non-core assets.
Citi also pointed to the company’s ongoing capacity expansion — clinker capacity is being scaled up from 16 million tonnes (mt) to 19 mt, and cement capacity from ~24 mt to 30 mt by FY26. At an EV/t of $120, Citi views Ramco as attractively valued relative to its growth potential.
Disclaimer: This article is based on the brokerage report by Citi. It does not constitute investment advice. Investors are advised to consult their financial advisors before making any investment decisions.
