Ramco Cements: Market Share Gains Continue

The Ramco Cement’s (TRCL) 1QFY21 results highlight the company’s continued market share gains. Volumes declined only 28% YoY for TRCL (v/s 53% YoY decline for regional peer India Cements). Cement EBITDA/t also improved to INR1,283 (+34% QoQ), led by higher prices in the South. They maintained their FY21/FY22E EPS estimates and retained Neutral rating as valuation at 13.0x FY22E EV/EBITDA prices in the benefit of the expansion-led market share gains. Commissioning timelines of ongoing expansions have also been pushed ahead by 2-3 months due to COVID-19 disruption. Sales volumes declined 28% YoY to 1.94mt (v/s est. 1.76mt), better than industry that declined by ~50% YoY in South India. Cement realization rose 12% QoQ to INR5, 284/t (+6% YoY) (v/s est. INR5,425/t). Cost/t (incl. windmills) increased to INR4,030/t (+6% YoY, +6% QoQ), led by higher raw material cost (due to clinker purchases) at INR972/t (+31% YoY, +21% QoQ) and negative operating leverage (from lower volumes), which was offset by lower power and fuel cost at INR779/t (-21% YoY, -10% QoQ). Operating costs were up on account of use of purchased clinker and was partially offset by benign fuel prices.