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Shree Cement Q2 Results Preview: Revenues may grow 3% YoY, but PAT could decline

Experts expect the company’s volumes to remain flat at about 6.4 million tonnes but expect the realizations to improve ~5%.

October 29, 2021 / 09:05 AM IST
Shree Cement Ltd. | The stock has risen 16 percent from Rs 24018.80 on December 31, 2020 to Rs 27874.30 on May 7, 2021. Market-cap jumped from Rs 86662 crore to Rs 100573 crore during the same time period.

Shree Cement Ltd. | The stock has risen 16 percent from Rs 24018.80 on December 31, 2020 to Rs 27874.30 on May 7, 2021. Market-cap jumped from Rs 86662 crore to Rs 100573 crore during the same time period.

 
 
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Shree Cement, one of the biggest players in the cement sector in India, is set to declare its results for the second quarter on October 29. Cement companies have been hit due to rising input and transportation costs on higher crude and the demand was affected due to back-ended monsoons in September.

Experts said the company’s volumes to remain flat at about 6.4 million tonnes but the realizations could improve ~5%.

We take a look at what estimates experts have about the performance of the company.

Kotak Institutional Securities

The brokerage expects net sales to increase 4% on a y-o-y basis to Rs 3,145 crore from Rs 3,022 crore, which is a decline of 9% on a sequential basis. On the volume and realization growth, it said: “We estimate volume of 6.3 mn tons (-3% y-o-y, -8% q-o-q) in 2QFY22 factoring the seasonal headwinds and back-ended monsoons. We expect blended realizations to decline 1% q-o-q (+8% y-o-y) due to seasonality.”

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Earnings before interest, tax and depreciation (EBITDA) is expected to decline 21.5% y-o-y to Rs 775 crore from Rs 988 crore reported last year. On a q-o-q basis, this works out to a decline of 23.5% from Rs 1,013 crore. Highlighting the reasons for this decline, the brokerage says, “We expect 3-4% q-o-q increase in power-fuel cost and 2-3% q-o-q increase in freight costs led by higher pet coke and diesel prices in the past six months resulting in a 5.5% q-o-q increase in costs/ton in 2QFY22.”

It expects a PAT of Rs 502 crore in this quarter as against Rs 547 crore reported last year, a decline of 8%. Sequential decline in PAT is 24% from Rs 662 crore.

Motilal Oswal

They expect the cement volumes to increase marginally by 1.1% on y-o-y basis to 6.6 million tonnes and improvement in realizations of 5.6% (y-o-y) to Rs 4,888/ton from Rs 4,628/ton last year. Realizations during previous quarter were higher at Rs 5,043/ton.

Overall sales are expected to clock Rs 3,227 crore, an increase of 6.8% on a yearly basis. EBITDA is expected at Rs 816 crore as against Rs 988 crore last year. EBITDA margins will reduce significantly by 7.4% to 25.3% this quarter from 32.7% last year. Company had achieved an EBITDA margin of 29.4% in the previous quarter. EBITDA/ton is expected at Rs 1,236/ton, down Rs 246/ton on a q-o-q basis.

The brokerage expect 9.4% y-o-y reduction in PAT to Rs 496 crore from Rs 547 crore last year.

Emkay Research

“Cement volumes are expected to decline by 3% y-o-y and by 8% q-o-q to 6.3 million tonnes, while blended realization is estimated to increase by 7% y-o-y and decline by 2% q-o-q”, says the brokerage.

It expects net sales to grow 2.9% y-o-y to Rs 3,108 crore and decline 9.9% on a quarterly basis. EBITDA is expected at Rs 801 crore, a decline of 19% from last year and 21% from previous quarter as the total cost/ton is expected to increase by 18% y-o-y /~3% q-o-q, mainly due to higher input cost. Accordingly, “blended EBITDA/ton is expected to decline by 16% y-o-y /14% q-o-q to Rs1,270/ton”, it says.

PAT at Rs 488 crore will be lower by 11% y-o-y and 26.3% q-o-q.

The stock opened at Rs 28,244 on Thursday, up Rs 136.75 from its previous day’s close. The stock is up 32% during the past one year, 17% during this financial year and 3% in past 3 months. However in the past 1 month, the stock is down 3%.



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first published: Oct 29, 2021 09:05 am
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