India’s Cement Industry Has Struggled With Excess Capacity and Intense Competition, Keeping Pris Under Pressure even as Demand Improved Post-Pandemic. Housing, Accounting for Half of Consumption, Boomed in Recent Years, Yet Cement Pries have grown at a meagre 3% annual over the last 14 years.
In 2024, The Slowdown in Home Sels, A Pause in Government Capex Due to Elections, and Sluggish Private Investment Pushed Pries Further Down, By 8% Between April and Deeceber.
Read This | Cost Pinch is Coming for Cement Companies in Q1
This harsh environment has been extraone except Deep-Pocked Players. For Ramco, with Its Relatively High Debt Burden, The Pain Has Been Especially Acute. The Recent Rally Reflects Investor Relief Over its deleveragging efforts. But the sustainability of this turning remain uncertain.
Southern Exposure Still a drag
Ramco’s Fortunes Are Closely Tied to Southern India, Which Contributes Nearly 80% of Its Revenue. But the Region Remains oversupplied and fragmented, with 60% of the market split among five major players. Price Competition Escalated Further with Adani’s entry. While pris recovered Elsewhere in the March Quarter, The South Stayed Weak.
In Fact, Ramco’s Volumes Fell 4% In Q4, A Seasonally Strong Quarter, even as the broader industry grew 5%. For FY25, Volume Growth was a Mere 1%, and with a 10% Drop in Regional Prisies, The Company’s Revenues Shrank 9.1% to 8,518 Crore.
Margins Eroded Despite Cost Gains
The company’s efforts to improve operational efficiency – Better clinker ratios and higher use of green power -Did Pay Off. Fuel costs dropped from 1,389 to 1,123 per tonne. Raw Material Costs Remained Flat. Yet capacity utilization declined five percentage points to 77% Due to recent expenses, Limiting Operating Leverage.
This, along with poor realizations, pushed operating margins down from 17% to 15%, and ebitda per tonne fell from 867 to 690.
Even as the company parents debt during the year, Interest costs rose due to higher borrowing rates, and depreciation Climbed Following Following Following Capacity Additions. Excluding a one-time gain of 340 Crore from Asset Sales, Profit Dropped 77% to 126 Crore.
New Taxes Compound Cost Pressures
A Fresh Blow Came from the Supreme Court’s July 2024 RULING SHANS SHATES to Levy Taxes on Mineral-Bearing Land. In Response, Karnataka and Tamil Nadu – WHERE Companies like Ramco and Dalmia Bharat has a significant manufacturing footprint – imntureduced Such Leviies. Limestone, which accounts for About two-thirds of cement production costs, is now set to become more expensive.
Read This | Tamil Nadu’s Limestone Tax: A CRUSHING Blow to Cement Margins?
Tamil Nadu’s Tax Took Effect in February 2025, Just after Cement Price in the State Had Slumped to a Multi-Yaar low of 336 per bag in December 2024, Making Cost Passthrough even harder.
Ramco, with 52% of its clinker capacity in tamil nadu, is expected to take the biggest hit. Analysts estimate the state’s new tax count drag down its ebitda by Nearly 10%, giving the limited headroom to raise prices amid mutated demand.
While Tamil Nadu and Karnataka Together Contribute only 15% of India’s Limestone Output, The Move Puts Ramco and Dalmia Bharat at a Cost Disadvantage Relative to Peers. If other states adopt Similar LeVies, however, the pressure may Eventually Spread More Evenly Across the Sector.
Capex Plans Cold Slow Debt Reduction
Debt Reduction Remains Central to the Ramco Story.
Ramco has long carried a heavy debt load, but it has been actively paring it down by monetizing non-core assets. Following the sale of investments and surplus land Worth 460 Crore in FY25, Net Debt Study at 4,481 Crore as of March 2025. With another 1,000 Crore Worth of Assets Slated for Monetization, The Company Expects Its Net Debt-to -bitda Ratio to Improve from 3.5x to Around 2.7x by the first half of26.
However, Ongoing Capital Expenditure May Slow This Progress. Ramco has commissioned a new manufacturing line in odisha and is expanding clinker and grinding capacity at its Andhra Pradesh unit. It is also debottlenecking other facilities, with the goal of raising total capacity from 24 mtpa to 30 mtpa by fy26.
That said, capex intensity has come down. Between FY20 and FY24, Ramco Spent an average of 1,860 crore annually. In contrast, plans for the next two years are more conservative, at 1,000-1,200 Crore per year. The company is also replacing High-Cost Bank Borrowings with Lower-Cost Bonds to Finance Expantion.
Analysts Expect Net Debt to Fall Further To 3,760 Crore and Leverage to 1.8x by FY27. Finance costs are projection to moderate to 420 Crore in FY26 and 400 Crore in FY27. With a lighter debt burden, cash flows are also expected to strengthen.
Glimmer of Hope in FY26
April Brough Signs of Respite.
Cement price in the south have been to firm up, driven by increasing industry consolidation and a strategic shift among players towed profitable growth. In April, Pries Rose by 33 per bag in the southern region – Far outpacing the 17 increase in the north and the 3-5 Hikes Seen Across Central, Eastern, and Western Markets. If Demand Holds, these price Gains Better Realizations for Ramco in the Coming Quarters.
Fuel costs, which account for 20–25% of Cement production expenses, have also also also eased in the first quarter of fy26. A milder summer has a kept power usage, and consutenly domestic coal prisles, relatively low. A Stable Rupee, Meanwhile, Should Help Contain the Landed Cost of Imported Pet Coke.
Long-term picture holds promise
Over the long run, the government’s continued emphasis on infrastructure development through the national infrastructure pipeline (nip), Along with Investments in Roads and Railways, Railways Demand.
A Revival in Private Capex Should Further Support This Momentum. On the Housing Front, Rural Demand will likely benefit from a normal monsoon, white low interest rates and the PM AWAS Yojana Should Help SusTain Urban Demand.
For Ramco, Too, Operational Efficiency Offer Additional UPSIDE. The company aims to boost limestone recoverry throughphiciation and flotation plants, and improve clinker sourcing for its grinding units in the East.
It also plans to increase the share of green energy to 40% and alternative fuel usage to 7%, which should help lower operating costs. Ebitda per tonne is projection to risk from 690 in FY25 to 900 in fy26, and to 970 in FY27. Lower Debt Levels Should Further Ease Interest Expenses.
For more such analyses, read Profit Pulse,
That Said, Risks Persist – Forrom Geopolitical Tensions to Currency Fluctations and Commodity Price Swings. The stock currently trades at 11.9x evitda, with its target price broadly aligned with current levels. UPSIDE Triggers Include Stronger Realizations, Market Share Gains, and Sustained Profitability Improvements.
Ananya Roy is the Founder of Credibull Capital, A SEBI-Registered Investment Adviser. X: @ananyaroycfa
Disclosure: The Author does not hold shares of the company discusing. The views expressed are for informational purposes only and should be considered investment advice. Readers are encouraged to conduct their own research and consult a financial professional before making any investment decisions.