Ramco Cements share price slumps over 8% as Q3 results miss the Street’s estimates

 Ramco Cements share price slumped more than 8% on Friday's session, missing the Street's projections for its profit for the quarter that ended in December (Q3 FY23) on Thursday. This was due to weaker demand and pricing, particularly in its primary market in south India.  Ramco Cements share price today opened at an intraday high of ₹939.85 apiece on the BSE. 

The company noted in its exchange filing that the demand for cement in Tamil Nadu and Andhra Pradesh was impacted during the quarter by the very high rainfall and the flooding that followed typhoon "Michaung." During this current review period, cement prices have come under pressure. There has been a slight decrease in logistical costs as a result of the lead distance reduction.

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According to Rajesh Bhosale, Equity Technical and Derivative Analyst, Angel One, Ramco Cements stock prices have seen a strong gap-down opening in today's session and have broken below their key intermediate support. Expect this weakness to persist in the near term, with ₹880 as the next key support, whereas any bounce is likely to face resistance around the gap left today. Immediate resistance is seen around ₹950.

For the quarter ended in December, the cement maker's standalone net profit after tax increased 39% year over year to ₹93.38 crore, although according to LSEG data, this amount was less than analysts' average estimate of ₹112 crore. According to reports, the company situated in Tamil Nadu saw a volume increase of 10% during the quarter, which was below the analysts' projected growth of 14–15%. Revenue from operations  increased to ₹2,113.10 crore, or around 5% more than the previous year.

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“The company continues to focus on the strategy of right products for right applications to make its brands stronger. EBIDTA for Q3FY24 is Rs.402 crores as against Rs.294 crores during Q3FY23 with growth of 37%. Blended EBIDTA per ton for the Q3FY24 is Rs.1,007/- as against Rs.808/- during Q3FY23. Operating ratio for Q3FY24 is 19% as against 15% in Q3FY23,” the company said in its filing. 

The sales volume for Q3FY24 is 4 million tonnes, up 10% from 3.64 million tonnes in Q3FY23. The current quarter's cost of raw materials grew by 3% YoY, from Rs. 944 to Rs. 970 per tonne, as a result of the inflationary impact on procurement costs. The combined fuel usage for Q4FY24 may decrease by $5 to $10 due to the recent pet coke price reductions, highlighted the company in its filing.

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In its analysis, ICICI Direct Research said that the very high rainfall and the ensuing floods had an impact on cement volumes in Tamil Nadu and Andhra Pradesh during the quarter. Even yet, industry-led volume growth of about 10% YoY is still superior because to prompt capacity increases. The usage of cement capacity was 74%. The realisations were affected by the south region's continued YoY decline in cement prices. Due to decreasing fuel prices and favourable operating leverage, EBITDA/ton increased significantly year over year.

"Going ahead, volume growth expected to remain healthy led b y capacity additions.Company targets t o reach cement capacity of 2 6 mtpa by FY26E from 22 mtpa at present," the brokerage said.

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