Here's why shares of Ramco Cements fell 8% on Friday, the most since November 2022

Cement prices are also under pressure for the quarter under review. Blended fuel consumption for the March quarter is likely to decline by $5 to $10 per tonne.

Additionally, the company has proposed to double the clinker capacity at its Kolimigundla unit to 6.3 MTPA and double its cement capacity to 3 MTPA with 15 MW of WHRS (Waste Heat Recovery). The most widely-accepted Waste Heat Recovery method in cement plants is to capture and combust fuel and waste gas streams from the preheater and clinker cooler.

The capex will be done at an estimated cost of ₹1,250 crore, which will be funded through a combination of internal accruals and banks. The capacity is likely to be commissioned within 18 months of getting environmental clearance.

As of December 31, 2023, the company had a net debt of ₹4,993 crore.

By financial year 2026, Ramco Cements intends to have 19 MTPA clinker capacity and 26 MTPA cement capacity.

On the valuation front, the Ramco Cements is trading at an EV to EBITDA multiple of 15 times for financial year 2024, which is expensive compared to peers like ACC (10.6 times), Dalmia Bharat (13.7 times), Birla Corp (9.7 times) and JK Lakshmi Cement (9.1 times).

Jefferies has maintained its underperform rating on The Ramco Cements with a price target of ₹890. The brokerage said that the earnings miss was due to lower volume growth.

Out of the 35 analysts that track Ramco Cements, 13 of them have a "sell" rating, while 16 of them have maintained a "buy" recommendation.

Shares of Ramco Cements are trading 8% lower at ₹896.2. The stock was down 2% on Thursday as well.