25 May , 2021 By : Kanchan Joshi
MUMBAI: South-focused The Ramco Cements Ltd reported muted numbers for the March quarter, especially on the operating front. Its Ebitda at Rs450 crore fell 10-12% short of analysts' expectations.
According to analysts at Motillal Oswal Financial Services Ltd, the sequential decline in Ebitda/tonne at Rs1,399 was weighed down by higher costs and lower realisations. Ebitda is short for earnings before interest, tax, depreciation and amortization. They say, the company's 4Q result highlights the adverse impact of higher sales in the eastern India market. This region has been seeing excess supply which has led to lower realisations for the company.
As for costs, the management said it expects its costs to remain stable sequentially in 1QFY22 as it has low-cost stock of petroleum coke (pet coke) for the next three months at a consumption cost of $75/tonne as against the spot price of $130/tonne. It should be noted that the company has reduced the usage of pet coke to 41% in FY21 from 48% a year ago. However, other overhead expenses are likely to increase with rise in volumes and increased cost of packing materials, they said.
Meanwhile, the company's expansion plans are facing some delays. The company's management said its clinker capacity of 1.5 mtpa at its Jayanthipuram plant in Andhra Pradesh along with the balance 9 megawatt of waste heat recovery system is expected to be commissioned in 1QFY22 as against 4QFY21 guided earlier. Mtpa is short for million tonnes per annum.
Also, the clinker capacity of 2.25 mtpa at Kalavatla plant Andhra Pradesh is expected to commissioned in 2QFY22 from 1QFY22 guided earlier.
The stock is trading at a one-year forward EV/Ebitda of around 13 times. EV is short for enterprise value. Analysts say, this valuation premium is not justified in the current backdrop. Reacting to the earnings, shares of the company fell around 1.5% on the National Stock Exchange on Tuesday.
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