Ramco Cements ticks off asset sales, but pricing will decide the next leg of growth
After monetizing over ₹1,000 crore of non-core assets and using the proceeds to pare debt, Ramco Cements has reduced balance-sheet stress. Whether the stock moves higher from here will depend on a recovery in cement pricing and utilization across its key markets.
The Ramco Cements Ltd is following through on its commitment to pare non-core assets. On 22 December, it announced the sale of assets worth ₹515 crore to Prestige Estates Projects Ltd. With this transaction, cumulative non-core asset monetization has reached ₹1,017 crore, slightly exceeding the company’s stated guidance of ₹1,000 crore. Before the Prestige deal, Ramco had already monetized ₹502 crore of non-core assets.
Why this matters
As of the end of September, Ramco carried a net debt of ₹4,591 crore, with a debt-to-equity ratio of 0.6x and an interest coverage ratio of 3.23x. These metrics are manageable, but hardly comfortable for a company still navigating a capital-intensive capacity expansion phase.
Cement remains a highly cyclical, fixed-cost-heavy business. Profitability hinges on pricing discipline, energy costs and the ability to sweat assets through higher utilisation. When pricing weakens, leverage can quickly become a constraint.
Management has been clear that proceeds from non-core asset sales will be channelled towards debt reduction. That has a direct payoff: lower interest costs, improved cash-flow resilience and reduced downside risk during periods of weak cement pricing.
What comes next?
Growth has been muted in recent quarters. In the half-year ended September (H1FY26), revenue rose just 4% year-on-year despite a low base, reflecting softer demand and uneven pricing amid early monsoons. Capacity utilization during the period stood at 69%, leaving room for operating leverage as volumes recover.
Ramco remains on track to scale its cement capacity to 30 million tonnes per annum (mtpa) by FY26, up from the current 24.4 mtpa. Crucially, much of the heavy lifting on capex is already behind it, suggesting that incremental volumes should translate into better margin flow-through.
Margins are already showing signs of recovery. Ebitda margin bottomed out at 13% in Q4FY25 before rebounding to 19% in Q1FY26 and easing slightly to 17% in Q2FY26. Ebitda per tonne rose to ₹866 in Q2FY26 from ₹721 a year earlier, aided by better realizations, lower power and fuel costs, and operational efficiencies. Power costs declined by ₹92 per tonne year-on-year, supported by higher green power usage, which accounted for 48% of total power consumption in Q2FY26, up from 39% a year ago.
Structural levers are also in play. The share of premium products has increased to 30%, up from 27% last year, while the construction chemicals business, which generated ₹165 crore in revenue in H1FY26, is being positioned as a long-term growth driver. Alongside ongoing efficiency initiatives, these factors should help support margins as demand normalizes.
Reality check
Ramco’s shares have risen nearly 10% over the past year. While the balance-sheet clean-up, capacity expansion and margin recovery are positives, much of this appears to be reflected in current valuations. From here, sustained upside is likely to hinge on a meaningful recovery in cement prices and utilization levels.
As ICICI Securities noted in a 30 December report, “The recent cement price erosion—mainly in The Ramco Cements’ key markets of south and east India—will likely constrain our Ebitda estimates, should prices fail to recover ahead." They added: “With the risk of an earnings downgrade, amid sticky concerns of high leverage (2.4x net debt/Ebitda for FY26 estimates) and muted return-on-equity profile (5–9% over the next two years), we see limited room to raise our 13x FY27 estimated EV/Ebitda valuation multiple."
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