Shree Cement Q4 net seen down 48% to Rs 183 cr

Shree Cement will declare its fourth quarter (April-June) earnings on Tuesday. Analysts on an average expect the profit after tax of the cement company to drop 48 percent year-on-year to Rs 183 crore, according to a CNBC-TV18 poll.

Total income is seen going down by 2 percent to Rs 1,422 crore in June quarter from Rs 1,455 crore reported in a year ago period. Analysts feel the decline in revenues of cement segment will be offset by higher revenues from power sales.

Earnings before interest, tax, depreciation and amortisation (EBITDA) may fall 18 percent Y-o-Y to Rs 380 crore in fourth quarter.

EBITDA margin is likely to slip 500 basis points year-on-year to 26.7 percent in June quarter.

Cement:

Analysts expect cement volumes to decline 3.4 percent Y-o-Y (flat Q-o-Q) to 3.2 million tonne (MT) (including clinker) and realizations to decline 7.7 percent Y-o-Y (2.1 percent Q-o-Q) to Rs 3,513/tonne.

De-growth and sequentially flattish cost trend led to lower cement business profitability. Shree Cement is a relative outperformer due to benefit from falling pet-coke prices and low exposure to rail freight.

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Power:

Analysts forecast merchant power sale at 695 million units as against 390 million units in previous quarter and 722 million units in a year ago period.

Realizations are expected to be at around Rs 4.02 per unit as against Rs 4.44/unit in 1QFY13 and Rs 4/unit in 4QFY13.

Power business is expected to post huge growth in revenue on the back of surge in volumes and fall in realizations.

Depreciation will be a big factor:

Analysts expect depreciation charges to surge as the company commissioned its 2 MMT kiln at Ras during the quarter.

Key issues to watch out for: 1) Volume and pricing outlook for North India; 2) Pet coke price trend and update on any forward agreements for merchant power; and 3) Update on cement capacity addition and capex plans.