Ramco Cements reports modest growth in Q1 FY25 despite challenging market conditions

Ramco Cements Limited has released its standalone un-audited results for the first quarter of fiscal year 2025, revealing a mixed performance influenced by market dynamics and internal strategic adjustments.

Marginal Growth in Sales Volume

For Q1 FY25, Ramco Cements reported a slight increase in sales volume, reaching 4.36 million tons compared to 4.30 million tons in Q1 FY24. This represents a marginal growth of 1% despite a challenging market environment exacerbated by the general elections. The company’s cement capacity utilisation for the quarter stood at 77%, reflecting a steady but modest operational performance.

Revenue Decline Amid Falling Cement Prices

The company’s net revenue for Q1 FY25 totalled Rs. 2,097 crores, down from Rs. 2,249 crores in Q1 FY24, marking a 7% decline. This decrease is attributed to an approximately 8% drop in cement prices. Despite the revenue dip, Ramco Cements continues to implement its strategy of aligning products with applications to strengthen its brand presence.

Earnings and Cost Management

Earnings Before Interest, Depreciation, Taxes, and Amortisation (EBIDTA) for Q1 FY25 was Rs. 328 crores, a 6% decrease from Rs. 349 crores in the same period last year. The blended EBIDTA per ton fell to Rs. 752, down from Rs. 812 in Q1 FY24. The company’s operating ratio remained stable at 16% for both quarters.

The cost of raw materials increased by 9% year-on-year, rising from Rs. 911 to Rs. 990 per ton due to inflationary pressures. Conversely, the cost of fuel per ton decreased significantly to $137, down from $170, thanks to changes in fuel utility and a rise in green power usage, which improved from 29% to 33%.

Investment and Development Initiatives

Ramco Cements has been investing in expanding its green power capacity and enhancing production facilities. The green power capacity as of April 1, 2024, was 209 MW, with plans to increase it to 219 MW by the end of FY25 and 234 MW by FY26. The company is also on track to achieve a cement capacity of 30 MTPA by March 2026 through strategic expansions and optimisations, including the commissioning of a new unit in Jayanthipuram and ongoing developments in Kolimigundla.

Financial Performance and Future Outlook

For Q1 FY25, Ramco Cements recorded a profit before tax of Rs. 48 crores, a sharp decline from Rs. 108 crores in the corresponding period last year. The increase in interest and depreciation costs, amounting to Rs. 113 crores and Rs. 167 crores respectively, reflects the investment in new manufacturing facilities.

The company has set a capex guidance of Rs. 1,200 crores for FY25, including maintenance capex. During Q1 FY25, it incurred Rs. 281 crores towards capex. Additionally, Ramco Cements plans to monetise non-core assets valued around Rs. 1,000 crores within the next 12 months. The net debt as of June 30, 2024, stood at Rs. 4,975 crores, with a net debt to EBIDTA ratio of 3.79 times and a marginal decrease in the cost of debt to 7.92%.