In today’s BSE session, Ramco Cements Limited (TRCL) shares plummeted to a 52-week low of ₹657.70. The stock is presently trading at a market price of 670.30, having touched an intraday low of ₹657.7 (-3.18 percent), and is trading below the 5-day, 20-day, and 50-day moving averages, as well as the 100-day and 200-day moving averages. The stock is now selling at a 40% discount to its 52-week high.
The business recorded consolidated sales of 1,722.68 crore in Q4FY22, up 5% from 1,641.53 crore the previous quarter. Operating costs grew 20% year over year, from ₹1,184.76 crore in Q4FY21 to 1,418.50 crore in Q4FY22.
The company’s EBITDA in Q4FY22 was 304.18 crore, down 33 percent from ₹456.77 crore in Q4FY21. Profit Before Tax (PBT) fell by 53% year over year, from 345.48 crore in Q4FY21 to ₹162.91 crore in Q4FY22, while Profit After Tax (PAT) fell by 42%, from ₹212.27 crore in Q4FY21 to ₹123.25 crore in Q4FY22.
Due to strong volume growth, the company’s revenue increased to ₹6,011 crores in FY22. However, the increase in cement pricing did not keep pace with the rise in fuel costs, and a 20% increase in diesel prices drove up total operating expenses. The company’s sales volume may have been higher because to CoVID lockout in May/June 2021 in the South and significant rains in Q3 in the South/East regions.
The 20% increase in fuel prices has increased total operational expenses. In FY22, the installation of JPM L-3 / Orissa GP increased financial expenses. The cost of debt fell from 6.59 percent to 5.54 percent this year as a result of the implementation of a new tax structure under Income Tax, and PAT improved.
The Board of Directors has suggested a dividend of Rs.3/- per share of Rs.1/- for the fiscal year ending March 31, 2022. The dividend will be paid within 30 days after the dividend being announced at the next Annual General Meeting, which will take place on Wednesday, August 10th, 2022. Yes Securities has given it a buy rating with a target price of ₹1135, representing a 69 percent upside potential from the current market price of ₹670.
“We lowered our EBITDA/PAT est. by 30/40 percent and 16/21 percent for FY23/24E,” the brokerage added. TRCL is expected to produce good operational cash flow of Rs26.6 billion in FY23-24E, as well as cover existing expenditure (Rs8.5 billion) and deleverage its B/S (10 billion). This will help TRCL reduce its Net Debt/EBITDA ratio to 1.2x by FY24E, down from 2.8x in FY22.
As a result, we maintain our BUY rating with a target price of Rs1135 (formerly Rs1188 on FY23E), pricing the company at 15x EV/EBITDA on FY24 projections.”
“TRCL should gain market share in its operational markets, spurred by capacity additions,” according to Motilal Oswal. During FY22-24, we predict an 11% volume CAGR. Though profits are expected to continue erratic in the short term, we think debt has peaked, and we project Net debt/EBITDA to be 1.9x in FY24, compared to 2.9x in FY22.
The stock is now trading at 16.5x/11.5x EV/EBITDA for FY23E/24E. TRCL is valued at 13x FY24E EV/EBITDA (vs. 14x before) to get at our TP of INR785 (vs. INR905 previously). The stock retains our BUY recommendation.”