Home Investment Memo: RAMCOCEM

Investment Memo: RAMCOCEM

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Our Rating: HOLD

Mehabe score: 6
G Factor: 4
Piotski Score: 6
The stock has a rating HOLD. The mehabe team score is reflective of its fundamental and technical merits. A rating above 8 is considered good buy. The stock has a G-Factor of 4 and Piotski score of 6.

Description

The Ramco Cements is engaged in manufacture of Cement, Ready Mix Concrete and Dry Mortar products. The Company caters mainly to the domestic markets.The Company is also engaged in sale of surplus electricity generated from its windmills after meeting its captive requirements.(Source : 202003 Annual Report Page No:131)Site: RAMCOCEMMain Symbol: RAMCOCEM

Price Chart

Market Cap: Rs 26,112 cr Price: 1107.0 Trading pe: 33.3x
Book-value: 243/share Div yield: 0.27 % Earning yield: 4.25%
Face-value: 1.00/share 52week high: 1132.00 52week low: 664.05

Technical Analysis

  • Stock trades at 1107.0, above its 50dma 1034.59. It also trades above its 200dma 927.99. The stock remains bullish on techicals
  • The 52 week high is at 1132.00 and the 52week low is at 664.05

Price Chart

P/E Chart

Sales and Margin

Strengths

Weakness

– Stock is trading at 4.56 times its book value
-The company has delivered a poor sales growth of 8.12% over past five years.
– has a low return on equity of 13.12% for last 3 years.
– might be capitalizing the interest cost
-Dividend payout has been low at 10.87% of profits over last 3 years

Competition

– The industry trades at a mean P/E of 17.6x. Dalmia BharatLtd trades at the industry’s max P/E of 33.78x. RAMCOCEM trades at a P/E of 33.3x
– Industry’s mean G-Factor is 5.6 while the mean Piotski score is 8.0. RAMCOCEM has a G-Factor of 4 and Piotski scoreof 6.
– Average 1 month return for industry is 16.7%. The max 1- month return was given by K C P: a return of 34.65 %

Quarterly Results

  • Sales for period ended Mar 2021 is Rs 1634.0 cr compared to Rs 1394.0 cr for period ended Mar 2020, a rise of 17.2%
  • Operating Profits reported at Rs 449.0 cr for period ended Mar 2021 vis-vis 280.0 for period ended Mar 2020 .
  • Operating Margins expanded 739.2 bps for period ended Mar 2021 vis-vis Mar 2020 .
  • The EPS for Mar 2021 was Rs 9.16 compared to Rs 8.76 for previous quarter ended Dec 2020 and Rs 6.07 for Mar 2020

Profit & Loss Statement

Profit&Loss Comments

  • Company reported sales of Rs 5291.0 cr for period ended Mar 2021 vis-vis sales of Rs 5389.0 cr for the period ended Mar 2020, a fall of 1.9%. The 3 year sales cagr stood at 6.1%.
  • Operating margins expanded to 29.0% for period ended Mar 2021 vis-vis 21.0% for period ended Mar 2020, expansion of 800.0 bps.
  • Net Profit reported at Rs 784.0 cr for period ended Mar 2021 vis-vis sales of Rs 604.0 cr for the period ended Mar 2020, rising 23.0%.
  • Company recorded a healthy Net Profit CAGR of 11.6% over the last 3 years

Balance Sheet Statement

Cash Flow Statement

Cash Flow comments

  • CashFlow from operating activities was positive.
  • CashFlow from operating activities: Rs 1892.0 cr for period ended Mar 2021 vis-vis Rs 748.0 cr for period ended Mar 2020

Sales Growth

Profit Growth Statement

Profit Growth Statement

Stock Price CAGR

Return of Equity

General Comments

– The company has had stable/constant Return on Equity (RoE) metric. The RoE on Last Year basis was 15.0% compared to 13.0% over the last 3 Years.
– The stock has given a return of 60% on a 1 Year basis vis-vis a return of 17% over the last 3 Years.
– The compounded sales growth on a TTM bassis is -2% vis-vis a compounded sales growth of 6% over the last 3 Years.
– The compounded profit growth on a TTM basis is 30% vis-vis a compounded profit growth of 12% over the last 3 Years.

Ratios

Shareholding Pattern

– FII shareholding has remained largely constant. The Jun 2021 fii holding stood at 8.64% vis-vis 8.26% for Mar 2021
– Public shareholding has remained largely constant. The Jun 2021 public holding stood at 23.13% vis-vis 22.57% for Mar 2021

Conclusion

– – Stock is trading at 4.56 times its book value
-The company has delivered a poor sales growth of 8.12% over past five years.
– has a low return on equity of 13.12% for last 3 years.
– might be capitalizing the interest cost
-Dividend payout has been low at 10.87% of profits over last 3 years

  • The business fundamentals of the stock remain stable. Stronger near term results will build interest in the stock. We suggest to wait for a upturn in business performance.
  • Technically, the stock remains above its 50 DMA 1034.59 and is trading at 1107.0, thus bullish price action wise.
  • Thus, overall we retain a HOLD on the stock.

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