Marred by weak demand, cement volumes fell 14.8 per cent y-o-y at 18 lakh tonnes. Realizations grew 18.5 per cent y-o-y/Rs.785 (- 0.2 per cent q-o-q/Rs.99) at Rs.5,021/t, missing our expectation of Rs.5,207. Total cost/t was in line with our estimates rising 4.2 per cent y-o-y/Rs.155 at Rs.3,859. Led by growth in realization, EBITDA/t surged 118.2 per cent/Rs.630 y-o-y at Rs.1,163 missing our expectation of Rs.1,350 due to lower realizations. Hence, operating profit margins grew 63.3 per cent y-o-y at Rs.220 crore, below our expectation of Rs.270 crore. Thanks to a 2.5 per cent y-o-y fall in interest expense, PAT grew 169 per cent y-o-y at Rs.97.5 crore, partially offset by a 17.7 per cent fall in other income.
Demand in the region continued to remain sluggish due to subdued demand across sectors. We expect recovery to kick-start in couple of quarters on the back of enhanced focus of State governments on infra spending, stabilization of newly formed States and revival in small scale housing demand sponsored under various state government schemes. In this backdrop, we like Ramco Cements as the best play on recovery in the South underpinned by highly competitive operations and high quality management.
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