For Ramco Cements, quick revival looks challenging

livemint.com:

₹800- ₹850 crore for FY24, which was later increased to Rs1,650 crore. Eventually, including maintenance capex, the amount stood at ₹1,922 crore. According to Centrum, Ramco has overspent on capex over the past four years resulting in lower return ratios.For FY25, the management has revised its capex guidance from ₹1,700 crore announced in Q3FY24 to ₹1,200 crore.

But it is still elevated. Further, net debt increased to ₹4,822 crore at March-end and the average cost of debt for FY24 rose to 7.70% compared to 6.35% in FY23. In the current backdrop, where capacity additions continue, meaningful deleveraging looks unlikely in the near term.The company proposed to double the clinker capacity in Kolimigundla, Andhra Pradesh, to 6.30 mtpa and double the cement capacity to 3 mtpa with 15 MW of waste heat recovery system.

This expansion is scheduled to be commissioned in FY26. Ramco’s aggregate installed capacity would reach 19 mtpa for clinker and 26 mtpa for cement by FY26. On the valuation front, the stock trades at an FY25 EV/Ebitda multiple of around 12 times, according to Bloomberg data.