Shree Cements Ltd, one of the biggest players in the cement sector in India, is set to declare its results for the third quarter ended December, 2021 later today.
The cement major is likely to take a dent in its performance during the quarter due to lower volumes impacted by back-ended monsoons, poor labour availability, regional issues such as construction ban, sand availability and truckers' strike, coupled with rise in power-fuel costs.
Experts expect the profit for the quarter to decline by 10-20 percent on-year and by 3-12 percent on a sequential basis to Rs 500-550 crore. The revenues are likely to increase 2-4 percent on-year and may improve 5 percent on quarter to Rs 3,300–3,450 core.
It may be noted that the company had recorded a standalone profit after tax (PAT) of Rs 626 crore for the same period a year ago with standalone revenues at Rs 3,309 crore.
The profit in the previous quarter of this financial year was registered at Rs 578 crore on revenues of Rs 3,206 crore.
Analyst Expectations
Brokerage firm Axis Securities expects the volumes to de-grow by 6 percent on-year owing to subdued cement demand. On a sequential basis, however, the volumes may improve by 7 percent to 6.7 million tonnes (MT).
Revenues are likely at Rs 3,433 crore with a growth of 4 percent on-year due to higher realisations compared to last year. On a sequential basis, the growth in revenues is likely to be 7 percent.
According to Axis Securities, gross profit is likely to dip marginally by 100 bps on-year to Rs 1,728 crore, compared to Rs 1,750 crore in the same period last year. Sequentially, this is an improvement of 13 percent. Gross margins at 50.3 percent are seen dipping by 260 bps owing to higher operating costs. Compared to previous quarter, there is an improvement of 260 bps in gross margins.
EBITDA (earnings before interest, tax, depreciation and amortisation) is likely to contract by 540 bps and 50 bps on a yearly and sequential basis due to the impact of higher operating costs.
The brokerage expects a per-tonne EBITDA of Rs 1,403 which is a decline of 8 percent on-year from Rs 1,520/tonne. Sequentially, this is a marginal decline of 100 bps.
PAT is forecast at Rs 561 crore for the quarter, a year-on-year decline of 10 percent and a sequential decline of 3 percent.
“Cement volumes are expected to decline by 9 percent YoY and increase by 4 percent QoQ to 6.5 MT, while blended realisation is estimated to increase by 12 percent YoY and by 2 percent QoQ,” Emkay Research said.
It pegs the revenues for the quarter at Rs 3,375 crore, an increase of 2 percent on-year and 5.3 percent on-quarter.
“Total cost/tonne should increase by 24 percent YoY and by 5 percent QoQ,” the brokerage said. This will result in a year-on-year decline of 20 percent in EBITDA at Rs 870 crore from Rs 1,089 crore. The EBITDA in the previous quarter stood at Rs 898 crore.
Consequently, EBITDA margins are likely to contract by 713 bps on-year to 25.8 percent and by 224 bps on-quarter.
“Accordingly, blended EBITDA/tonne is expected to decline by 13 percent YoY and by 6 percent QoQ to Rs 1,330/tonne,” Emkay said in its report. It expects a 16.2 percent year on-year and 9.1 percent on-quarter decline in PAT at Rs 525 crore.
Motilal Oswal, on the other hand, expects sales volume to decline by 8 percent YoY and variable cost to increase by 44 percent YoY and by 13 percent QoQ on higher energy costs. Other expense are likely to rise by 21 percent YoY, it said.
It forecasts volumes of 6.59 MT and cement realisation of Rs5,098 per tonne which is higher by 10.3 percent on-year and flat compared to previous quarter.
Basis this, the revenues are expected at Rs 3,360 crore, an increase of 1.5 percent compared to same period last year and 5 percent higher than previous quarter.
EBITDA for the quarter is likely at Rs 842 crore, a decline of 23 percent on-year and a decline of 6 percent on-quarter.
EBITDA margins may slump by 780 bps on-year to 25.1 percent and by 290 bps compared to preceding quarter.
“We expect EBITDA/tonne at Rs 1,278/tonne which is a decline of Rs 143/tonne QoQ and a decline of Rs 242/tonne YoY,” added Motilal Oswal in its report.
It forecasts an on-year decline of 21 percent in PAT at Rs 497 crore, a sequential decline of 14 percent.
The stock of Shree Cement closed at Rs 24,800.9, down Rs 464.6 (-1.84 percent) from its previous close on the National Stock Exchange on February 3. It is down 4.6 percent in the past one year and is down 9 percent in the past one month.
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