MOSL: THE RAMCO CEMENT (Downgrade to Neutral)-Margins seen moderating
THE RAMCO CEMENT: Margins seen moderating; Downgrading to Neutral
(TRCL IN, Mkt Cap USD2.4b, CMP INR735, TP INR740, 1% Upside, Downgrade to Neutral)
** Volume growth moderates; better realizations drive margins: Volumes increased 3.4% YoY to 2.7mt in 1QFY20. Cement realizations were up 10% YoY at INR4,989/ton. Consequently, revenue grew 14% YoY to INR13.7b (our estimate: INR12.2b) in the quarter. Blended EBITDA/t increased 42% YoY to INR1,277, with cost/t increasing by 2% YoY to INR3,791. Power EBITDA stood at INR162m, resulting in cement EBITDA/t of INR1,217. EBITDA grew 47% YoY to INR3.5b (our estimate: INR2.6b), with the margin expanding 6pp YoY to 25.2%. PAT was up 54% YoY to INR1.9b (our estimate: INR1.4b).
** Key highlights from management interaction: (1) Coal and pet coke prices softened in 1QFY20. (2) Fuel mix - pet coke usage was reduced to 42% in the quarter v/s 62% in the year-ago period.
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.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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