Ramco Cements shares downgraded, target cut after weak Q3 amid cement price pressure

Shares of The Ramco Cements Ltd. are expected to open lower on Tuesday, February 10, after the company reported softer-than-expected December quarter results.

Average cement prices fell 6% quarter-on-quarter, steeper than the anticipated 4% decline. Trade cement prices were down 8% in the South and 9% in the East compared with September 2025 exit prices.

The company reported a net profit of ₹385.6 crore, up from ₹182.4 crore a year ago, aided by a 46% jump in exceptional gains.

These included a profit of ₹506 crore from the sale of non-core assets, partly offset by a ₹27 crore impact related to the labour code 2025.

Revenue rose 6.2% YoY to ₹2,105 crore, while EBITDA remained flat at ₹279 crore. Operating margins declined to 13.3% from 14% a year ago.

EBITDA missed Motilal Oswal's estimates by 11%, as elevated fuel costs and rupee depreciation pressured margins.

Raw material costs increased following the levy of a mineral bearing land tax of ₹160 per tonne of limestone in Tamil Nadu, translating into an impact of around ₹47 crore in Q3FY26.

Power and fuel costs rose ₹27 per tonne YoY and ₹59 per tonne sequentially due to higher fuel prices, although a higher share of green power at around 47%, compared with 39% last year, helped partially offset the impact.

Other expenses increased due to higher brand promotion spend for the construction chemicals business and higher repairs and maintenance costs.

Net debt has declined on the back of asset monetisation.

On the capex front, the company incurred ₹823 crore in the first nine months of FY26, including ₹222 crore in the December quarter.

Full-year FY26 capex is now estimated at ₹1,100 crore, lower than the earlier estimate of ₹1,200 crore.

Installed capacity currently stands at 27.44 million tonnes and is expected to rise to 31.14 million tonnes by March 2027.

CLSA downgrades Ramco Cements

CLSA has downgraded Ramco Cements to 'Underperform' and cut its price target to ₹890 per share. The brokerage believes the recent rally, driven by cement price hikes, is unjustified.

While monetisation of non core assets, including land, is seen as a positive, it is not sufficient to offset underlying operational weakness.

CLSA also cited the risk of sharp estimate cuts ahead.

Jefferies, meanwhile, has maintained a 'Hold' rating with a price target of ₹1,045.

The brokerage said the company continues to focus on deleveraging and its efforts to scale non cement products such as construction chemicals.

It adds that the recent discovery of a quartzite mine could offer opportunities to expand non cement offerings, though these initiatives remain monitorable for earnings.

Jefferies has trimmed FY26 and FY27 EBITDA estimates by 5-8%.

Shares of Ramco Cements closed 3.80% higher on Monday at ₹1,205. The stock has gained over 11% in the past one month.