Motilal Oswal - Ramco Cements (MADRASCEM) MOSL: RAMCO CEMENT (Buy)-Healthy volume growth; margins impacted

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Motilal Oswal

MOSL: RAMCO CEMENT (Buy)-Healthy volume growth; margins impacted

Ramco Cement: Healthy volume growth; margins impacted

(TRCL IN, Mkt Cap USD2.4b, CMP INR696, TP INR802, 15% Upside, Buy)

Healthy volume growth from key markets: TRCL’s volumes grew 22% YoY to 2.61mt (our estimate: 2.58mt) in 1QFY19, driven by strong growth in the underlying market. Cement realization declined 1.5% YoY and 0.8% QoQ to INR4,537/ton (our estimate: INR4,621/ton) due to weaker prices in the South partially offset by better prices in the East. Revenue grew 19% YoY to INR12.05b (our estimate: INR12.18b). Wind power revenue was INR186.7m.
Cost push dents margins: Blended EBITDA/t fell 31% YoY and 9% QoQ to INR899 (our estimate: INR1,045) due to cost push. Cost/t grew 8% YoY and 3% QoQ to INR3,709 (our estimate: INR3,677) due to higher P&F cost/t (+25% YoY, led by higher petcoke prices) and freight cost/t (+21% YoY, led by higher diesel prices as also increase in lead distance). Power segment reported EBITDA of INR140m in 1QFY19, while Cement EBITDA/t was INR846 (-29% YoY; -15% QoQ). EBITDA declined 16% YoY to INR2.35b (our estimate: INR2.69b). Interest cost fell 26% YoY to INR114m. PAT declined 20% YoY to INR1.25b (our estimate: INR1.38b).
Management commentary: (1) Freight cost/t increased due to 21% YoY rise in diesel price as also higher lead distance; (2) Power and fuel cost/t increased due to sharp increase in petcoke and coal prices.

06/08/2018 8 EN

Underlying

Ramco Cements

Ramco Cements is engaged in the manufacture and production of cement, ready mix concrete and dry mortar products in India. Co. operates in three divisions: Cement; Drymix Products and Ramco Concete. In the Cement Division, Co.'s main product is Portland Cement, which is manufactured in eight production facilities that include integrated cement plants and grinding units. Co.'s Dry Mix Division manufactures pre mixed dry mortars such as plasters, wall putty and tile adhesive. Co.'s Ramco Concrete Division manufactures concrete based on customers requirements such as permutations based on concrete grades, workability and site conditions. Co. also operates a wind farm in India.

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INE331A01037 National Stock Exchange of India India

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Motilal Oswal

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MOSL: RAMCO CEMENT (Buy)-Healthy volume growth; margins impacted

MOSL: THE RAMCO CEMENTS: Cost under control; volume growth surprises

Ramco Cements Ltd: 1 director

MOSL: THE RAMCO CEMENTS (Upgrade to Buy)-Optimistic on demand, but wary of near-term cost inflation

MOSL : HOME FIRST FINANCE COMPANY: Earnings in-line with sustained improvement in asset quality

MOSL : SHOPPERS STOP: Ticking the right boxes

MOSL : ERIS LIFESCIENCES: Enhanced efforts toward product launch-related activities

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