New Delhi: kicked off Thursday session’s under severe selling pressure as the stock plunged 10% following its flop show in September 2022 quarter, leaving brokerage firms in a fix over the stock’s outlook.
The cement and cement products player reported a 98% year-on-year (YoY) decline in net profit to Rs 11 crore for the quarter that ended September 30, 2022. It reported a bottomline of Rs 515.84 crore in the same period the previous year.
Its EBITDA declined 52% to Rs 193 crore from Rs 402 crore, mainly due to a sharp increase in fuel prices and weak cement prices. The company’s revenue rose by 19% YoY to Rs 1,793 crore during the quarter.
Jefferies maintained an underperform rating on
with a target price of Rs 615. The global investment bank prefers over other mid-tier peers earlier, it said.
The global brokerage firm said drag from the digital risk business is likely to continue. “A tough macro environment could further hurt the company. Valuations are at about 21x 1-year; forward consensus EPS is high,” it added.
Following the announcement of earnings, shares of The Ramco Cements plunged as much as 10% on Thursday before trading at Rs 643 at 10.30 am. The stock settled at Rs 704.10 in the previous session.
Since the overall fuel prices peaked in the ongoing financial year, the power & fuel cost per tonne of cement for the July-September period sharply increased to Rs 2,013 from Rs 1,057 in the year-ago quarter.
Yes Securities believe that The Ramco Cements reported mixed-bag performance. Despite the seasonal weakness, it posted 10% better revenue than anticipated, due to strong volume growth. However, escalated costs dented the EBITDA, it said.
“We expect volume to increase with improving utilisation of newly-commissioned capacities. We have increased our revenue estimate for the next two fiscals. We believe margins to remain under pressure due to energy price volatility coupled with high exposure to the overcrowded south and volatile demand,” Yes Securities added.
The brokerage has a buy rating on the stock with a revised target price of Rs 956 earlier from Rs 1,135. Even the revised target price suggests a 35% rally in the counter.
Ramco Cements proposed to increase the grinding capacity of the Haridaspur plant at Odisha by 0.9 mtpa. Since other infrastructures are already in place, it will spend Rs 130 crore on the expansion, which will double its capacity.
believe capex guidance is a bit aggressive, given the current leverage position and the operating cash flow it may generate over the next two years. Factoring in higher-than-expected fuel costs, it has trimmed its estimates.
The domestic brokerage has also reduced its target price for the stock to Rs 785 per share from Rs 830 earlier but maintained an ‘add’ rating. It has cited lower demand or price and higher input cost as the key risks to the company.
(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of Economic Times)
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