Shree Cements Q2 net may dip 26% to Rs 160 cr: Poll

Shree Cements may post a 26.3 percent fall in net profit and 7.2 percent decline in net sales for its second quarter ending December on the back of continued cost inflation and weak pricing year-on-year, according to a CNBC-TV 18 analyst poll estimate.

The company is likely to post its profit after tax at Rs 160 crore against Rs 217 crore and net sales at Rs 1,325 crore against Rs 1,428 crore (Y-o-Y), said the poll.

According to estimates, the growth in cement volumes is likely to be offset by weak pricing. Continued cost inflation along with weak pricing may lead the downslide.

The company’s volume is likely to come in at 3.15mt – a growth of 5 percent aiding topline.

The cement business is expected to remain under pressure due to higher non-trade sales. There is a sharp decline in cement realisation, particularly in Rajasthan.

The cement manufacturer’s EBITDA may slide 27.4 percent to Rs 270 crore against Rs 371.7 crore and EBITDA margin may fall to 20.4 percent against 26 percent (Y-o-Y).

Most analysts expect a sharp decline in its power sales volumes. According to a Motilal Oswal report, the merchant power sale is estimated at 790 million units against 786 million units in year-on-year and 417 million quarter-on-quarter. The realisaitons are pegged at Rs 3.9/unit (versus Rs 3.85 Q-o-Q and Rs 3.97 Y-o-Y and power EBITDA contribution is estimated at Rs 63.2 crore (versus Rs 67 crore Y-o-Y and Rs 31 crore Q-o-Q.

Key issues to watch out:

*Volume and pricing outlook for North India

*Pet coke price trend and update on any forward agreements for merchant power

*Update on planned expansion and progress in capex plans