Motilal Oswal has maintained a Neutral rating on The Ramco Cements and set a new target price of ₹1,030 in its latest research report dated May 5, 2025.
Price Hike in South May Help
The report says Ramco Cements is likely to benefit from the recent sharp increase in cement prices in South India. In April 2025, average cement prices in the region went up by ₹33 per bag, or about 10% month-on-month. Since Ramco sells nearly 78–79% of its cement in South India, it stands to gain from these higher prices.
Tax Burden in Tamil Nadu
However, there is also some pressure. The Tamil Nadu government has introduced a new mining tax of ₹160 per tonne on limestone mining. This may impact Ramco Cements more than others because about 52% of its clinker capacity is located in Tamil Nadu.
Cost Saving to Balance the Impact
Despite the new tax, the report says the company is likely to balance the extra cost through:
- Recent price hikes
- Better clinker-to-cement ratio (C:C ratio)
- Various cost-saving measures
These factors may help offset the burden from the new mineral tax.
Valuation & Outlook
Currently, the stock is trading at:
- 14x EV/EBITDA for FY26E
- 12x EV/EBITDA for FY27E
This is slightly below its long-term average of 15x. Also, the company’s EV per tonne stands at USD 119 for FY26E and USD 102 for FY27E, compared to its historical average of USD 130.
Motilal Oswal has slightly increased its valuation multiple to 13x FY27E EV/EBITDA (up from 12x earlier). Based on this, they have raised the target price to ₹1,030, from the previous ₹900.
The brokerage has reiterated its Neutral rating, suggesting that investors may wait for a better price before considering fresh entry.