Shree Cement Q1 PAT seen down 21% at Rs 84 cr

Shree Cement is expected to report a fall of 21% in profits for the first quarter of FY12. During the period, profit after tax is likely to be at Rs 84 crore against Rs 105.9 crore in the corresponding quarter last fiscal.

Sales are seen going up by 6% to Rs 1,003 crore from Rs 944.5 crore year-on-year.

EBITDA is expected to go down by 10% (YoY) to Rs 261 crore against Rs 289 crore. During the period, EBITDA margin too is seen declining to 26% versus 31% year-on-year.
 
Factors:

Cement volumes to grow 4-5% YoY and realizations are expected to improve by 2%

Likely to see merchant power revenues slump

Merchant power sale is estimated at 270 million units at Rs 4.4/unit (against Rs 4.6 in 4QFY11 and Rs 6.15 in 1QFY11). Lower merchant power realizations, cost inflation and negative operating leverage will impact EBITDA margins  Higher depreciation and interest will further hit the bottomline. Shree Cement is vulnerable to significant price correction in its key markets of North and Central India which will impact profitability in the coming quarters.