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Prabhudas Lilladher Report
The Ramco Cements Ltd. reported Q1 FY22 Ebitda at Rs 3.64 billion, below our/consensus estimate of Rs 4.2 billion/Rs 3.7 billion.
The miss came on all counts except in line realisations.
We remain negative on Southern region due to overcapacity and volatile demand pattern.
As demand outlook improves for the region in H2, volume growth would come at the cost of weaker margins due to rise in competition for market share and low capacity utilisation.
The same has played out in FY18-FY20, FY13-FY15 and FY09-FY11.
In addition to that, it won’t be easy to take meaningful increase in prices on current high levels.
Secondly, Ramco Cement’s earnings profile would deteriorate with increasing exposure to low margin and volatile markets of Andhra Pradesh/Telangana and East regions.
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