Detailed Rationale

Crisil Ratings has assigned its ‘Crisil AA+/Stable’ rating to the non-convertible debentures of Ramco Cements Ltd (TRCL) and has reaffirmed its ‘Crisil A1+’ rating on the commercial paper programme.

 

The ratings continue to reflect the strong market position of the company in the southern region, healthy operating efficiency and financial risk profile. These strengths are partially offset by modest return on capital employed (RoCE) and exposure to volatility in input prices and cyclicality in the cement industry.

 

In the first nine months of fiscal 2026, consolidated operating income increased ~5% on-year, on account of recovery in realisations, even as sales volume remained flattish, leading to earnings before interest, tax, depreciation and amortisation (Ebitda) per tonne improving to Rs 804 during this period (against Rs 691 in the first nine months of fiscal 2025). With recovery in realisation and cost optimisation initiatives being undertaken, Ebitda per tonne is expected to remain healthy at over Rs 900 fiscal 2027 onwards (against Rs 666 in fiscal 2025).

 

With high debt-funded capital expenditure (capex) undertaken by the company over the past few years to enhance its capacity, the financial risk profile moderated with net debt to Ebitda ratio increasing to 4.0 times in fiscal 2025, from 1.9 times in fiscal 2021. The company is expected to incur capex of around Rs 2,000 crore during fiscals 2026 and 2027 towards commissioning 6.7 million tonne per annum (MTPA) capacity (to grow its total capacity to 31.14MTPA). However, with improvement in profitability and proceeds from monetisation of non-core assets of Rs 619 crore during year till date of fiscal 2026, net debt to Ebitda ratio may improve to below 2.5 times in fiscal 2027. Going forward, the company is expected to focus on ramp up of new facilities and incur lower capex that will lead to further improvement in the financial risk profile on sustained basis. The ratings also draw comfort from the healthy financial flexibility and comfortable capital structure of the company.

Analytical Approach

Crisil Ratings has combined the business and financial risk profiles of TRCL and its subsidiaries and associates as the entities have strong operational and financial linkages.

 

Crisil Ratings has considered factoring liability as debt.

 

Please refer Annexure – List of entities consolidated, which captures the list of entities considered and their analytical treatment of consolidation.

Key Rating Drivers - Strengths

Strong market position in southern region with diversified presence in eastern region

TRCL had cement grinding capacity of 26.4 MTPA as on February 28, 2026, spread across Tamil Nadu, Andhra Pradesh, Karnataka, Odisha and West Bengal supported by clinker capacity of ~16 MTPA located in Tamil Nadu and Andhra Pradesh. It is the seventh-largest player in the country based on grinding capacity. The operations are largely concentrated in the southern region with capacity share of 86%. The company has established market presence and strong brand recognition in South India (third largest player in the region), which contributed to 81% of overall sales in the first six months of fiscal 2026. The key states include Tamil Nadu, Kerala, Karnataka and Andhra Pradesh.

 

Out of the overall capacity, TRCL has been operating 2 MTPA in Kolaghat, West Bengal and 1.8 MTPA in Haridaspur, Odisha to service the eastern market, which contributed 19% to overall sales in the first six months of fiscal 2026. The share of the eastern region has decreased gradually over the past four fiscals (from 24% in fiscal 2021) as it commissioned new capacities in the southern region. The company has a target to commission 3.7 MTPA grinding capacity (2 MTPA already commissioned) in Tamil Nadu and Andhra Pradesh in fiscals 2026 and 2027 and 3 MTPA in its Kolimigundla plant (Andhra Pradesh) through brownfield expansion in fiscal 2027. Accordingly, the share is expected to remain rangebound over the medium term, with the company setting up additional facilities which will cater to the southern and western regions.

 

TRCL is expected to retain its strong brand image in the South with brands such as Ramco Supercrete and Ramco Supergrade and sustain healthy cash accrual, while gradually establishing itself in new markets over the medium term.

 

Healthy operating efficiency

Operating efficiency arises from sharp focus on operations supported by the presence of captive power plants, which meet majority of the power requirement, setting up of split grinding units near markets aiding better management of freight cost, and continuous investment to increase operating efficiency. The company has captive thermal power plant capacity of 193 megawatt (MW) along with wind power capacity of 166 MW and waste heat recovery system (WHRS) of 53 MW. Also, the company is in the process of implementing WHRS capacity of 15 MW at its Kolimigundla facility leading to increased operating efficiency.

 

The operating efficiency is also expected to benefit from rise in capacity utilisation, which will be supported by healthy demand outlook. The company is expected to sustain its high effective capacity utilisation at more than 75% over the three fiscals through 2026, a significant rise from around 56% in the decade ending fiscal 2023.

 

Healthy financial risk profile

The financial risk profile is healthy, marked by strong financial flexibility, comfortable capital structure and adequate debt protection metrics. Adjusted gearing stood at 0.74 time (based on gross debt) as on March 31, 2025, and is expected to remain below 0.7 time over the medium term. Net cash accrual to adjusted debt ratio is expected at over 0.25 time in fiscal 2026, with monetisation proceeds of non-core assets of Rs 619 crore to be utilised to repay debt. Receipt of any additional proceeds from monetisation of non-core assets during the current fiscal will lead to further improvement in the capital structure and debt protection metrics.

 

With large, debt-funded capex undertaken by the company over the past few years to enhance its capacity, the net debt to Ebitda ratio increased to 4.0 times in fiscal 2025. The company is expected to incur capex of Rs 2,000 crore between fiscals 2026 and 2027 as it nears the current capex phase to commission 6.7 MTPA capacity. Further, capex is expected to be at an average of ~Rs 1,000 crore per year, funded mostly through cash accrual. It will be primarily incurred towards capacity expansion at Bommanahalli, Karnataka where it is in the process of land acquisition with 59% of mining land acquired till December 2025. With capex intensity expected to reduce from fiscal 2027 onwards, the financial risk profile will remain healthy over the medium term with net debt to Ebitda ratio below 2.5 times in fiscal 2027 and below 2.0 times on a steady-state basis thereafter. However, higher-than-expected debt-funded capex or lower-than-expected profitability may constrain the financial risk profile, which will be monitorable.

 

TRCL is the flagship company of the Ramco group, which has a lineage of over 80 years and healthy relationships with lending community and capital markets. This is also reflected in the competitive interest rates enjoyed by TRCL.

Key Rating Drivers - Weaknesses

Modest RoCE owing to significant investment for capacity additions

The company’s RoCE remained subdued at below 10% since fiscal 2022 owing to high capex undertaken in the past few years. The company undertook capex of around Rs 10,200 crore during fiscals 2020 to 2025, which resulted in significant increase in capital employed. However, with completion of the ongoing capex and effective capacity utilisation expected at more than 70% over the medium term, RoCE is expected to improve gradually but will remain modest.

 

Susceptibility to volatility in input cost and realisations and cyclicality in the cement industry
Capacity addition in the cement industry tends to be sporadic because of the long gestation period for setting up a facility and numerous players adding capacity during the peak of a cycle. This led to unfavourable price cycles for the sector in the past. Decline in cement prices across the industry during fiscal 2025 impacted the profitability of cement players. Moreover, profitability remains exposed to volatility in input prices, including raw material, power, fuel and freight. Realisations and profitability are also affected by demand, supply, offtake and regional factors.

Liquidity Strong

TRCL enjoys healthy liquidity, driven by expected annual cash accrual of more than Rs 1,200 crore in fiscals 2026 and 2027. TRCL also has access to fund-based limit which was moderately utilised at 24% (based on drawing power) over the six months through September 2025. The company has debt obligation of Rs 1,026 crore and Rs 1,180 crore for fiscals 2026 and 2027, respectively. It is expected to utilise cash accrual along with proceeds from monetisation of non-core assets to meet the debt obligation. The company is expected to fund capex through a mix of internal cash accrual and debt. Bank lines are expected to meet the incremental working capital requirement.

ESG Profile

The environment, social and governance (ESG) profile of TRCL supports its already strong credit risk profile.

 

The cement sector has a significant impact on the environment owing to higher emissions, waste generation and water consumption. This is because of the energy-intensive cement manufacturing process and high dependence on natural resources such as limestone and coal as key raw materials. The sector has social impact due to its nature of operations affecting the local community and health hazards involved. TRCL has continuously focused on mitigating its environmental and social risks.

 

Key ESG highlights

• The company has reduced its specific greenhouse gas emissions (Scope 1 + 2) to 578 kgCO2e per tonne of cement produced in fiscal 2025, down from 590 kgCO2e/tonne in the previous fiscal. Furthermore, the company is following the Global Cement and Concrete Association's net-zero roadmap for the Indian cement and concrete industry, indicating a commitment to further reductions in line with global industry standards.
• In fiscal 2025, 36% of the company's total energy consumption came from WHRS and renewable sources, which was an increase from the previous fiscal (~34%). The company aims to increase its share of renewable energy in its total energy mix to 45% in the near term.
• The company achieved a water-positive status, with a factor of 4.5 times by fiscal 2024. It plans to further enhance water conservation through improved rainwater harvesting, groundwater recharge, equipment efficiency and water reuse.
• The company has been largely maintaining nil lost time injury frequency rate among its workforce. However, there was one contract worker fatality reported in fiscal 2025.
• Its governance structure is characterised by 71% of its board comprising independent directors, dedicated investor grievance redressal system and extensive financial and non-financial disclosures.

 

There is growing importance of ESG among investors and lenders. Commitment of TRCL to ESG will play a key role in enhancing stakeholder confidence, given high access to domestic capital markets.

Outlook Stable

Crisil Ratings believes TRCL will continue to benefit from its established market position, strong operating efficiency and healthy financial risk profile over the medium term.

Rating Sensitivity Factors

Upward Factors

• Sustained improvement in business risk profile, driven by diversification in other markets
• Improvement in net debt to Ebitda to under 1.25 times on a sustained basis driven by lower debt

 

Downward Factors

• Sustained weakening in operating performance due to lower-than-expected demand
• Larger-than-expected, debt-funded capex delaying the improvement in net debt to Ebitda to below 2.0 times on a steady-state basis.

About the Company

TRCL is a leading cement player with capacity of around 26 MTPA spread across Tamil Nadu, Andhra Pradesh, Odisha, Karnataka and West Bengal. Set up in 1957, the company manufactures and markets cement under the brand, Ramco, predominantly in South India. It also has windmill capacity of 166 MW, captive thermal power plant capacity of 193 MW and WHRS of 53 MW.

 

TRCL is the flagship company of the Ramco group, which deals in cement, fibre cement sheets, textiles (cotton yarn) and information technology. Other companies in the group include Rajapalayam Mills Ltd, Ramco Industries Ltd (‘Crisil A1+') and Ramco Systems Ltd. The group was founded in 1938 by the late P A C Ramasamy Raja and is being managed by his grandson, P R Venketrama Raja.

 

In the first nine of fiscal 2026, TRCL’s consolidated revenue was Rs 6,418 crore and profit after tax (PAT) was Rs 548 crore, compared to Rs 6,121 crore and Rs 244 crore, respectively, in the corresponding period of fiscal 2025.

Key Financial Indicators (consolidated- Crisil Ratings adjusted)

Particulars	Unit	2025	2024
Revenue	Rs crore	8516	9374
PAT	Rs crore	270	356
PAT margin	%	3.2	3.8
Adjusted debt/adjusted networth	Times	0.74	0.73
Adjusted interest coverage	Times	2.77	3.77

 

Any other information: Not Applicable