- Higher fuel, packing costs outweigh volume growth
- Capacity expansion, WHRS commissioning remain on track
Ramco Cements reported y-o-y higher sales volumes in Q1FY27, but elevated fuel and packing material costs, lower y-o-y cement realisations and additional mineral-bearing land tax weighed on profitability.
Cement sales increased 12% y-o-y to 4.48 mnt from 3.98 mnt in Q1FY26. However, EBITDA declined 22% to INR 314 crore from INR 404 crore, while EBITDA per tonne fell to INR 681/t from INR 981/t.
Revenue increased 10% y-o-y to INR 2,276 crore in Q1FY27, compared with INR 2,077 crore in Q1FY26. However, the improvement in volumes did not translate into higher profitability as input costs increased sharply and average cement prices declined 2% y-o-y.
Sales growth continues across cement, construction chemicals
Cement sales increased by 0.50 mnt y-o-y, while construction chemicals sales rose 13% to 135,000 tonnes from 120,000 tonnes in Q1FY26. Cement capacity utilisation improved to 70% from 68% a year earlier, although it remained below 83% recorded in Q4FY26.
Demand trends remained mixed across the company’s key markets. B2C and B2B volumes increased y-o-y in both the South and East. However, state elections disrupted demand in Tamil Nadu, Kerala and West Bengal.
The share of premium products in the South declined marginally to 28% from 29% in Q1FY26, while the East reported an increase to 23% from 22%. Trade prices improved from March exit levels, rising 5% in the South and 6% in the East, providing some support to realisations during the quarter.
Fuel, packing costs compress margins
Power and fuel costs increased 17% y-o-y to INR 1,326/t in Q1FY27 from INR 1,122/t in Q1FY26. Costs were also up 24% from INR 1,072/t in Q4FY26. The increase was attributed to higher fuel costs amid the West Asia war, while an 11% y-o-y rupee depreciation during FY26 added further pressure.
Packing material costs increased 30% y-o-y due to higher polymer prices, further impacting operating costs.
Raw material costs offered partial relief, declining 4% y-o-y to INR 1,013/t from INR 1,056/t. Costs were also 2% lower than INR 1,031/t in Q4FY26. Logistics costs, however, increased 2% y-o-y to INR 1,061/t from INR 1,038/t, although they were 1% lower than INR 1,076/t in Q4FY26.
The company also incurred an estimated INR 39 crore impact from the mineral-bearing land tax on limestone in Tamil Nadu.
Outlook
Higher cement volumes and improving trade prices in the South and East may support revenue growth in the coming quarters. However, margin recovery is likely to depend on whether fuel and polymer costs moderate and whether recent price improvements offset the 2% y-o-y decline in average cement prices. The planned capacity additions and 15 MW waste heat recovery system may improve operational efficiency during FY27, while demand recovery after election-related disruptions could provide additional support to sales volumes.
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