Ramco Cements Q2 PBT up 25% to Rs 216 cr on pricing, better volumes

Total income up 11% to Rs 1,332 cr; exports grow by 39%

Ramco Cements Ltd has posted a pre-tax profit of Rs 216.21 crore during the quarter ended September 30, 2019, up 25.3 per cent over a profit-before-tax figure of Rs 172.6 crore earned during the same quarter the preceding year. Higher volumes and favourable pricing helped the company beat market expectations, market analysts said.

The company said it has been constantly introducing cost-reduction measures and improving productivity while maintaining quality. Ramco has been striving continuously to optimise supply chain efficiency, a company statement said. Its total income grew 11.3 per cent to Rs 1,332.08 crore, from Rs 1,196.67 crore during the corresponding three months last year.

Analysts said the company has delivered a strong performance ahead of estimates, mainly led by better-than-expected volume and pricing, despite a challenging environment.

"EBITDA grew by 27 per cent YoY to Rs 260 crore (-20 per cent QoQ) significantly ahead of our estimate of Rs 200 crore, while EBITDA margin stood strongly at Rs 958 as against Rs 830 and Rs 1,199 in the second quarter of FY19 and first quarter of FY20, respectively," said Reliance Securities.

The company's standalone net profit rose by 47 per cent over the previous year, led by better operational performance and lower tax (under Minimum Alternative Tax), the analyst firm said. Consolidated net profit grew 43.2 per cent to Rs 172.26 crore during the quarter under review, from Rs 120.31 crore a year ago.

"Healthy improvement in sales volume and lower-than-expected decline in realisation were key positive surprises. We maintain our positive view on the stock and will come out with a detailed note shortly," added the analyst from Reliance Securities.

The company said that during the half year ended September, it sold 5.43 million tonnes of cement, compared with 5.08 million tonnes in the previous corresponding period. Exports grew by 39 per cent during the period.

Ramco Cements has doubled the capacity in its cement grinding facility in Kolaghat, West Bengal to two million tonnes per annum (MTPA), and started commercial production on September 26. The remaining on-going capacity expansion programme is progressing as per schedule though there are delays due to the extended monsoon. The company has planned to spend Rs 1,430 crore on capacity expansion. It proposes to meet this capex through internal accruals and borrowings. Its total borrowings as on September 30, 2019 were Rs 2,441 crore (including current maturities of Rs 287 crore), of which Rs 1,145 crore came from banks, and Rs 345 crore of soft/interest-free loans are long-term in nature.