Ramco Cements Ltd is facing fresh challenges after Tamil Nadu introduced a new tax on mineral bearing land from Feb 20, 2024. The state now levies Rs 160 per tonne on limestone which has to be paid upfront when it is shipped. This adds to the existing limestone mining costs for cement companies in the state. Since nearly 50% of Ramco’s cement production is in Tamil Nadu, the company will be impacted the most compared to others like Dalmia Bharat, UltraTech Cement and Ambuja Cements which have lower exposure in the state.

A report by Kotak Institutional Equities dated March 12 reduced Ramco’s earnings estimates for FY26 and FY27 by 5% and 4% respectively due to these higher costs. Cement margins are already under pressure and petroleum coke price is also rising which will further crimp margins.

Ramco’s Q3FY25 performance showed decline in profit per tonne while its peers grew, indicating tough market conditions especially in south. While cement companies may try to increase prices to cover the new costs, competition in south is high and this will limit their ability to increase prices.

Despite all these challenges Ramco is expanding and plans to increase its capacity to 30 mn tonnes by FY26. The company is also working on reducing debt by selling non-core assets. Better market conditions in south may help in future but Ramco’s stock is still under pressure and is trading at a premium to its peers on FY26 earnings.