RAMCOCEM

’ Profitability Hit, Long-Term Triggers in Chemicals and Quartz

reported weak Q3FY26 results, with EBITDA falling short of expectations despite modest volume growth. Cement realizations declined sharply due to pricing pressure in South India, where overcapacity and competition remain key challenges. While debt reduction and non-core asset monetisation provide some relief, profitability remains subdued. Expansion delays and regional headwinds weigh on near-term outlook, though construction chemicals and quartz businesses offer optionality for longer-term growth. Financial Performance - Cement volumes: 4.43 mt, +4% YoY (first growth after three quarters). - Realisations: Down ~7% YoY, impacted by 8–9% price fall in South & East trade segments. - EBITDA: ₹281 crore, below consensus estimate of ₹345 crore. - EBITDA/tonne: ₹610, at a 13-quarter low. - Net debt: Reduced to ₹4,145 crore (Dec 2025) from ₹4,481 crore (Mar 2025). - Exceptional charge: ₹34 crore due to labour code provisions. Operational Challenges - Market share loss as industry grew at high single digits vs Ramco’s 4%. - South India exposure (~80% of volumes) continues to cap pricing power. - Net-debt-to-EBITDA expected to remain >2x in FY26–27, limiting return ratios. - Karnataka expansion deferred to FY29 due to weak profitability. Capacity & Growth Plans - Current capacity: 24 mtpa, targeted to reach 31 mtpa by FY27. - Kolimigundala (AP) Line-2 commissioning delayed by 12 months to Mar 2027. - FY26 capex guidance cut from ₹1,200 crore to ₹1,100 crore. - Non-core asset monetisation: ₹1,020 crore realised over two years, additional ₹200 crore planned. Sector & Outlook - Government capex push supportive, but South India’s low utilization (~66%) and upcoming supply additions (~25 mtpa FY26–27) will cap pricing recovery. - Construction chemicals and quartz businesses seen as long-term triggers. - Stock up 31% in past year, trades at 16.5x FY27E EV/EBITDA, considered unattractive given near-term headwinds.