Analysis: The Ramco Cements Limited

NSE:RAMCOCEM Cement Market cap: ₹20.6K cr

Growth thesis

Ramco Cements produces cement with integrated clinker production, grinding units, and waste heat recovery systems (WHRS). Key segments include South/East India operations, dry mix products, and captive power generation. Growth hinges on Kurnool Line-2 expansion (clinker capacity to 6.3 MTPA, cement to 3 MTPA by FY2026) and Odisha grinding plant upgrades, driving volumes from 17.5 million tons in FY2024 to 19-20 million tons in FY2025. Capex of Rs 1,700 Crores in FY2025 will fund these expansions while maintaining net debt below Rs 5,000 Crores. Over 2-3 years, higher utilization (clinker to 100% by FY2025) and green power adoption (45-52% share) should improve margins as fixed costs spread over 26 MTPA cement capacity. Key execution risk is environmental clearance delays for Kurnool Line-2.

Why is The Ramco Cements Limited stock rising?

  • Doubling clinker capacity at Kolimigundla to 6.30 MTPA and cement capacity to 3 MTPA with 15 MW WHRS, estimated cost Rs.1,250 Crores, scheduled for FY2026.
  • Commissioning of 10 MW WHRS at RR Nagar by March 2025, increasing total WHRS to 53 MW by FY2025, and further to 68 MW by FY2026.
  • Planning additional 14 MW WHRS in Tamil Nadu plants, aiming for green power share to reach 50-52% by end of FY2025.
  • Capex guidance of Rs.1,700 Crores for FY2025, funded predominantly through internal accruals.
  • Net debt expected to peak at around Rs.5,000 Crores, with non-core asset monetization potential of Rs.500-600 Crores to support balance sheet.

Research report

companyname: THE RAMCO CEMENTS LIMITED ticker: RAMCOCEM sector: Cement / Building Materials Ramco Cements manufactures cement and construction chemicals, operating principally in South and East India. Founded in 1961, the company has built a cement capacity of 24.44 MTPA and a clinker capacity of 16 MTPA. It also owns 166 MW of wind farms, 193 MW of thermal power, and 45 MW of waste heat recovery systems (WHRS). The company sells through a network of over 9,700 dealers and 24,000 sub-dealers, s...

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Catalysts

capex, margin expansion

Growth guidance

Volume Growth: 19-20 million tons for FY25

Management consistency

mixed

RS rating: 26 Stage: Stage 4

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