In a remarkable trading session on September 25th, The Ramco Cements witnessed a 5% surge in its stock price, backed by robust trading activity and optimistic projections from brokerage firms regarding the company’s near-term prospects.
As of 3 pm on the NSE, The Ramco Cements shares were trading at Rs 902.20 each, marking a substantial increase of Rs 43.50 or 5.07%.
Notably, nearly 10 lakh shares of the company changed hands during the trading session, far exceeding the monthly average of 3 lakh shares.
This impressive upward momentum can be attributed in part to a ‘buy’ recommendation from Geojit Financial Service, which set a target price of Rs 1,034 for the stock.
Geojit Financial Service stated, “The Ramco Cements’ ongoing capacity expansions, combined with the Indian government’s unwavering commitment to infrastructure and housing development, bode well for the company’s future volume growth. Furthermore, with declining input costs and a strategic focus on reducing debt post FY24, valuation is expected to receive a boost. The company has also indicated a strong projected volume growth of approximately 20% in FY24. We anticipate a 12% CAGR (Compound Annual Growth Rate) in revenue from FY23 to FY25.”
The brokerage firm believes that The Ramco Cements will benefit from its recently commissioned one metric tonne grinding capacity at R.R. Nagar in Tamil Nadu and an expected capacity addition of 0.9 metric tonnes at its Odisha plant by the end of this fiscal year, further supporting volume expansion.
Geojit Financial Service also noted, “The company is strategically expanding its dry mix product capacity, having commissioned two plants in FY23 and planning to establish two more in Andhra Pradesh and Odisha by FY24. These products offer a margin potential of approximately 25-30%, contributing nearly Rs 80 crore in revenue per plant.”
While reporting results for the April-June quarter, The Ramco Cements posted a YoY revenue from operations increase of 26.30%, reaching Rs 2,247 crore. However, net profit for the quarter experienced a YoY decline of 32.11%, amounting to Rs 74 crore. Operating profit margins contracted by 200 basis points compared to the previous year, settling at 15%.
The Ramco Cements primarily engages in the manufacturing and sale of cement and related products, and the company appears poised for a promising future as it capitalizes on growth opportunities and strategic initiatives.
