Cement maker Shree Cement Ltd's consolidated net profit plunged to Rs 76.44 crore in the quarter ending September 30, against Rs 446.63 crore in the same period last year, as the industry bore the brunt of a quarter in which both cement demand and prices took a major hit.
The company's consolidated topline also fell by more than 15 percent year-on-year to Rs 4,054.17 crore, while expenses declined by a marginal 3.5 percent during the quarter to Rs 4,212,27 crore, primarily led by lower input costs, as well as declining power and fuel costs. On a per tonne basis, expenditure declined to Rs 4,122, against Rs 4,503 in the year-ago period.
Standalone revenues for the quarter were reported at Rs 3,727 crore, lower by 18 percent year-on-year, while the net profit on a standalone basis was Rs 93 crore, down by 81 percent on an annual basis.
On a standalone basis, Shree Cement's earnings before interest, taxes, depreciation, and amortisation, or EBITDA, declined by 32 percent year-on-year to Rs 593 crore, while standalone EBITDA margin was 21 percent, lower by 100 basis points against the corresponding quarter in FY24.
Like most other cement makers, Shree Cement's sales volumes declined in the face of tepid demand, as a heavy monsoon was coupled by poor demand from major infrastructure projects. Tender awards for roads and highways, especially from the Union government, were limited due to a post-General Election lull and the formalities of the post-election Budget.
Standalone sales volumes for Shree Cement for Q2 were lower by 7 percent year-on-year to 7.60 million tonnes, with premium products forming 15 percent of total trade sales. The company had previously outlined its strategy to increase sales of premium products across various micro-markets, in order to seek higher realisations in a sluggish pricing market.
In a press release, Shree Cement's Managing Director, Neeraj Akhoury, acknowledged the role of an extended monsoon and a "softer" pricing environment in the earnings for the quarter, but sounded a note on optimism in the second half of the year.
"The company expects gradual improvement in demand driven by increased government spending in the second half of the financial year and improved demand from urban and rural segments owing to good monsoon. Shree Cement remains focused on its long-term growth and sustainability, with ongoing investments in capacity expansion and the adoption of greener technologies," Akhoury said.
Shree Cement currently has expansion projects in Rajasthan, Karnataka, Uttar Pradesh, and Chhattisgarh, part of a Rs 7,000 crore-capital expenditure plan announced last year, to expand both cement grinding and clinker capacity. From the current 56.4 million tonne per annum (MTPA) in capacity, the company is planning to increase it to more than 80 MTPA, and has also indicated that it may look at acquisitions in its key markets.
On November 11, Shree Cement's shares on the National Stock Exchange closed at Rs 24,423.50, down by 0.5 percent from the previous close.
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