ICICI Securities has maintained its 'Hold' rating on The Ramco Cements, setting a target price of Rs 942. The decision follows the removal of the Mineral Bearing Land Tax in Tamil Nadu. While this provides cost relief, the brokerage remains cautious due to high competition and the company's debt profile, especially after a weak first quarter.
ICICI Securities has kept its 'Hold' recommendation for The Ramco Cements, with an unchanged target price of Rs 942 per share. This decision comes shortly after the company announced in an exchange filing that the Mineral Bearing Land Tax in Tamil Nadu has been stopped, effective from August 22, 2026. The removal of this tax, which previously cost the company Rs 160 per tonne of limestone, follows the enactment of the MMDR Amendment Act, 2026.
For investors, this tax cessation is a welcome development. It is expected to provide some relief on the cost front, which has been under pressure due to global fuel and crude oil prices. However, the brokerage firm suggests that this positive change does not immediately improve the company’s outlook enough to change its rating. The financial results from the first quarter of the 2027 fiscal year highlight why caution remains appropriate. In that quarter, the company saw its revenue grow by 10% year-on-year to Rs 2,276 crore. However, its net profit dropped sharply by 63% to Rs 31.86 crore, and the profit margin contracted to 13.55%, down from 19.23% in the same period a year earlier.
Beyond the immediate impact of the tax change, the brokerage pointed to persistent challenges facing the cement industry. High competitive intensity in the market continues to limit the company's ability to raise prices. Furthermore, The Ramco Cements faces internal financial hurdles, specifically high debt levels and low return on equity. These factors serve to restrict the potential for earnings growth and valuation improvement. The stock has already faced pressure in the market, declining by roughly 20% over the past year as of late August 2026.
While the elimination of the limestone tax is a structural improvement for the company's cost base, the long-term impact on the stock price will depend on broader industry trends. Investors should track whether this cost savings can effectively boost profit margins in the upcoming quarters, especially during the seasonally weaker periods in the second and third quarters of the year. Additionally, management’s ability to reduce debt and improve return ratios will be key factors for the market to consider moving forward. The company's future performance will also be tied to how effectively it navigates the highly competitive cement landscape in South India.