Ramco inds


Flagship company of the Ramco group, RIL is a company engaged in manufacture of fibre cement sheets. It also manufactures roofing accessories, fibre cement pressure pipes etc.

Debt (as on fy 12) )— long term 114 cr + short term 57 crores â total debt is 173 crores. Cash and equivalents is 13 crores.

Enterprise value for ramco comes to 740 crores. (market cap 580 crores +173 crores debt -13 crores cash)

For fy 12, company made sales of 674 crores and made net profit of around 62 crores. For h1 fy 13 sales was 430 crores (h1 fy 11 sales at 324 cr) and net profits of 32 crores (h1 fy 11 net profit at 29 croresâfirst half of fy 12 also included profit on sale of land of around 9 crores).

Company holds 4.93 crores shares of madras cements and based on current market price of madras cements of rs 200 per share, the holding value comes to around 950-1000 crores.

There are rumours of stake sale by promoters of Madras cements to Lafarge or some other big cement players. If this happens then there could be a big value unlocking for Ramco inds shareholders.

By itself, the business of Ramco Inds is quite robust and if the trigger of cement business of Madras cements materializes, stock could give excellent returns.

disc: starter position taken in stock today at around 66.

1 Like

Hi Hitesh,

I came across news articles on sell of madras cements’ grinding unit. Are you refering to same one or some other rumour?

Also how about promoter integrity? Once value unlocking happens, will they share the value with shareholders? Many a time such value unlocking become value traps. Will be glad to receive your views.

Otherwise, downside looks limited from current levels and as you suggested there is large value to be unlocked.

Best Regards

Dhwanil Desai


by and large ramco group is a well respected south based group. rumours of grinding unit were reported by newspapers but I think there might be a bit of consolidation in cement space and in that aspect madras cements remains a good fit for MNCs.

regarding promoters sharing their wealth with shareholders, I dont intend to wait for that long.

To me there seems to be some undervaluation to be exploited here for good upsides. For that matter to me the whole asbestos sheets group seems to be grossly undervalued and it is somewhere in beginning or middle of its bull phase. So makes sense to join the ride and get off in time.

hitbhai, what are the indicators that it is time to get off? When interest rates start to rise?

at present all these asbestos stocks are in a pause mode after a sharp rally. I expect another round of uptrend and then if that happens, we will review the position then.

let some froth come around. let some analysts come on tv and put up their buy recommendations and then the fat will be in the fire. till then slow accumulation is the order of the day.

Sri Sri tulsian ji on ramco

Anyone had a look at this name recently?

  1. Valuing the core biz of asbestos (@300 crore) at 5-6x P/E for a low teens growth. Profitability should improve with better utilization of recently expanded capacity in India/Sri Lanka.

  2. Plus investments valued at 900 core (main asset is the stake in Madras cements, which is one of the most profitable cement players in South, with EBITDA/tonne around Rs 800-900 and which is trading at EV/tonne of $65-70 - i.e. half the replacement cost).

The current market cap discount to net asset value is around 70%. That is obviously large, but even the Net asset value is depressed as noted above in (1)/(2). In a blue sky world, EV/t for cement business can be easily $100-120/tonne, while core biz valued at 10x P/E - so discount to a (blue sky) net asset value is around 85-90%.

Dividend yield is around 3% and core business generates free cash flow, normalized for growth capex.

Corporate governance appears fine (look at the EBITDA/tonne in the cement biz. It wouldn’t be this high in an overcapacity cement market, if promoters were stealing money via capex).

Worth a closer examination.

How is the view on Ramco Industries now? The EPS growth is impressive 10, 20, 30 and the net profit growth is also good with a good ROE of 25%

Considering recent Govt. of India’s Affordable housing scheme , Does anybody think it is worth to invest?
Dics: I have invested little.

Ramco Industries is going great. As on today the company is available for free considering the investments and cash reserves.

Ramco industries mcap is 2500cr whereas their investment in Ramco Cements, Ramco Systems and Rajapalayam Mills alone at CMP is 3645 Cr. This valuation doesn’t include their investments in Indian bank, HDFC Bank, HDFC limited, DHFL housing and other non listed companies.

Increase in product awareness and adoption of higher margin Fibre Cement Boards (FCBs) lead to recent run-up in Indian roofing businesses. I dug deeper to find whether FCB has potential to be a game-changer in construction building material industry. If you are interested to read what I put together, please click here. I am looking forward to any questions/comments.

Disc: not holding Ramco.

Hi All, In Screener the PE of comany is given around 11 and EPS is 23 but in other websites like BSE, Valueresearch EPS is 6.29 and PE is 33 … Something I am missing here?

The first one is a consolidated PE while the second PE is a standalone PE.


Key Takeaways from Cement Expo 2018

Management Stake
Cement Head, Dalmia Bharat
East Region Head, UltraTech
President, Grey Cement, JK Cement
Director, Marketing, Penna Cement
CEO, Vicat Cement
Country Head, FLSmidth
Country Head, ABB
Director, Energy & Production, ACC Ltd
Director, India Ratings
SVP, Orient Cement
Director, ThyssenKrupp
CEO, Beumer
Head, Cement Refractories, Calderys

From discussing the strategies for promoting cement consumption, to the challenges affecting regional demand & supply scenario and thereon raise the cement per capita consumption, to efforts in adopting the substitutes of costly/dirty pet coke/coal and thereon reducing the carbon footprint, to optimized usage of raw materials (limestone etc) which have been used over last 100 odd years, to the concept of green cement and finally discussing the factors that can drive prices from the current juncture. This conference has answered all our major queries.

What are the divergent trends in demand-mix?

Traditionally, Housing Sector comprises 60-65% of total demand while Infrastructure took the backseat with merely ~30% of demand. Of late, Roads & Infrastructure segment has gained huge traction with multiple projects being executed in Smart Cities, Airports, Metro Projects, Sea Ports & Affordable Housing Projects. Share of Bulk Cement has shot up to 20% from 5% (in FY2013). Ready Mix Concrete (RMC) demand has picked up significantly on the back of humongous demand auguring from metro projects, mass housing projects, high-rise residential projects.

How are we planning to tackle the freight related issues?

Freight Cost is a function of fuel price, lead distance, rail-road-sea connectivity. Share of railways has gone down from 52% (in FY2013) to now 27% mainly because of the feasibility and technical challenges like overloading of rolling stocks, tracks being occupied and lower availability of wagons to Cement Industry by prioritizing the appetite of Power Sector. As an antidote, companies have been trying to focus more on roads and increase the share of waterways (if possible). Of late, few companies like Penna/Vicat have procured vessels for transportation across coastal routes to neighbouring countries and as a result their freight cost has declined substantially.

What kind of new technologies are coming to reduce the packaging cost for companies?

In 2018, BOPP kind of technology has been launched which will reduce the cost/bag by 30% (Rs2.1-2.5). Demand of Paper Packaging Bags has gone up on the backdrop of environmental concerns. There is a price difference of Rs10 between base quality and premium quality.

Given the backdrop of limited limestone reserves, what type of strategy can conserve the same?

At this juncture, PPC comprises of 56% while OPC comprise of 34% and rest by PSC. Limestone Reserves will exhaust in next 45-50 yrs. Henceforth, few State Govts are promoting the use of PPC/PSC related cement units which possess following advantages:

  1. PPC/PSC cuts down Co2 emissions
  2. Reduce Global Warming
  3. Sustainable Usage of Limestone Reserves
    Limestone Calcined Clay (LCC) has emerged as the classic substitute of Limestone wherein the former helps in reducing environmental pollution. Director of ACC was of the view that Govt should premanently ban the usage of OPC especially in building dams, bridges, roads & affordable construction in order to save limestone and curb pollution levels.

As per the BSI Standards, what are the updated max usage criteria for raw materials?

Fly Ash – 35%
Slag – 65%
Pozzolana – 35%
Lime – 25%
Calcined Clay – 20%

Companies were of the view that the discussions for modifying the criteria is round the corners and will be promulgated in a couple of quarters. Excess blending can turn as a positive for the Cement companies that are located in the vicinity of the power and steel plants.

Considering the volatile price of dirty pet coke, what strategy can help the cement companies to adopt alternative of pet coke which will be less polluting and stable priced for the cement players?

Using 100% biomass (Sewage Sludge, Municipal Waste) is the only solution to tackle the problem of pet coke. Few State Govts like Maharashtra etc have been vying to dispose Municipal Waste into Cement Kilns and have achieved the same in many districts. To substantiate the same, ACC’s plant at Wadi is disposing 600 tns of waste per day since almost last 8 months.

What are the new technologies that can help in reducing power consumption?

Of late, Vertical Roller Mills (VRM) is in demand for the new expansions either organically or by way of debottlenecking. VRM is replacing Conventional Ball Mills and thereon helps in saving power upto 11-14 units/tn and also increases the output efficiency. In Cost Comparison, VRM is almost ~20% costlier than Conventional Mills.

What are the expectations of Demand Growth & Pricing Discipline in next 2-3 years?

While many players who attended the conference were of the view that FY19E demand will grow by 7-8%, they believe that Demand is expected to outpace GDP growth, going forward. Subsequently, Per Capita Cement Consumption will inch up to 300 kg by FY21E. Of late, pricing discipline is a result of joint effort by both small cap and large cap players and it’s bound to increase amid the busy construction season which will start from Jan’19 onwards. As an alternative, cement companies have been trying to increase the share of their premium category…


This is Bijo Scaria and it is my first attempt to write in this forum and I am really fortunate to know about this forum.
I am very new to investing so I have few observations and would like to know about other’s view/suggestion on my observations.

Ramco industries Market value on September 8, 2021 is 2450 Crore. 70% of Total assets is deployed in investments. Valuation of Ramco industries
a) Market value of quoted investments – 5,461 Crore
b) Other Investments at cost - 96 Crore
c) Other assets at book value - 1,183 Crore

Total Assets - 6,740 Crore
Less: Outsiders Liabilities at cost - (516 Crore)
Net Worth/Value - 6,225 Crore

But Ramco industries market cap at 2450 crore. Go and buy the company today and sell off quoted investment of ramco @ 5461 crore. Straightaway earn a profit of 3011. Top of that you get a company which makes free cashflow of 136 crore annually.
Simple logic

Why the Company is undervalued

ROCE is less than 6% is the main concern for the company??

Reality it is a long-term investment company which does not usually sell its shares so basically most of the profit generated during the past years have used to acquire other business.

What is the reason for market not to realize its value?

EPS Growth
Company has able to generate more than 23% of net profit in 2021 and in last year profit was 17.5%. Company was able to increase its net profit by reducing other expenses.
company has recorded highest turnover of 419 crore in June quarter.
Is that shows an increased efficiency of the company?
can we expect a good EPS growth in 20 -21?

Disc: Not invested