Shares of Ramco Cements Limited (TRCL) fell to a 52-week low of ₹657.70 in current BSE trade. The stock is currently trading at a market price of ₹670.30, after hitting an intraday low of ₹657.7 (-3.18%) and is trading below the 5-day, 20-day and 50-day, 100-day and 200-day moving averages. The stock is now trading at a 40% discount to its 52-week high.
In Q4FY22, the company reported consolidated revenue of ₹1,722.68 crore, up 5% year-on-year ₹1,641.53 crore in Q4FY21. Operating expenses increased by 20% year-on-year, from ₹1,184.76 crores in Q4FY21 at ₹1,418.50 crore in Q4FY22. In Q4FY22, the company recorded EBITDA of ₹304.18 crore, down 33% from ₹456.77 crores in Q4FY21. Profit before tax (PBT) decreased 53% year-on-year, from ₹345.48 crores in Q4FY21 at ₹162.91 crores in Q4FY22, while profit after tax (PAT) declined 42% year-on-year from ₹212.27 crores in Q4FY21 at ₹123.25 crore in Q4FY22.
The company’s turnover reached ₹6,011 crore in FY22, driven by robust volume growth. However, the increase in cement prices was not enough to offset the increase in fuel costs, and a 20% increase in diesel prices pushed up overall operating costs. Due to the CoVID lockdown in May/June 2021 in the south and torrential rains in the third quarter in the south/east regions, the company’s sales volume may have been higher. The 20% jump in diesel prices pushed up overall operating costs. The installation of JPM L-3 / Orissa GP increased the financial costs in FY22. With the introduction of a new income tax system, the cost of debt has fallen from 6.59% to 5.54% this year, and the PAT has strengthened.
For the financial year ending 31 March 2022, the Board has proposed a dividend of Rs.3/- per share of Rs.1/- each. The dividend will be paid within 30 days of the announcement of the dividend at the next Annual General Meeting to be held on Wednesday, August 10, 2022. Despite its poor performance, Yes Securities gave it a buy recommendation with an objective course of ₹1135, which implies a potential upside of 69% from the current market price of ₹670.
The brokerage said: “We have reduced our estimated EBITDA/PAT by 30/40% and 16/21% for FY23/24E. We believe that TRCL will generate a healthy operating cash flow of 26.6 billion rupees and that its ongoing investment (8.5 billion rupees) will also reduce its B/S (10 billion) during the financial year. 23-24E. This would help TRCL reduce net debt/EBITDA to 1.2x by FY24E from 2.8x FY22. Thus, we maintain our BUY recommendation with a TP of Rs1135 (previously Rs1188 on FY23E), valuing the stock at 15x EV/EBITDA on FY24 estimates.”
Motilal Oswal said “TRCL is expected to gain market share in its operating markets through capacity expansions. We expect a volume CAGR of 11% in FY22-24. Although earnings are expected to remain volatile at short-term, we believe debt has peaked and expect net debt/EBITDA to be 1.9x FY24 vs. 2.9x FY22 The stock is trading at 16.5x/11, 5x FY23E/24E EV/EBITDA We price TRCL at 13x FY24E (v/s 14x earlier) EV/EBITDA to arrive at our TP of INR785 (v/s INR905 earlier) We maintain our BUY rating on the stock. “
The opinions and recommendations made above are those of individual analysts or brokerage firms, and not of Mint.