Shree Cement Q1 FY23 weighed down by price pressures

Shree Cement Q1 FY23 weighed down by price pressures

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Shree cement introduced its Q1 FY23 outcomes final week.

The corporate managed to register a year-on-year (YoY) progress of 21.45 per cent in topline to ₹4,414.85 crore. The rise in income could be attributed to a rise in cement costs in the course of the quarter. The costs on the all India degree have been at ₹404 and ₹393 per bag in April and Could 2022, respectively in opposition to ₹370 and ₹ 374 in April and Could 2021, respectively.

The gross sales quantity was up 10 per cent YoY at 7.5 million tons, leading to a value progress of 10.45 per cent.

On the profitability entrance, like its friends, the corporate offered a subdued image. The EBITDA of the corporate contracted round 21.6 per cent in Q1 of FY23 over the identical interval final 12 months.

Amongst its friends, Ultratech posted highest quantity progress of 16 per cent, whereas ACC posted 10.5 per cent progress. When it comes to income, Ultratech led with 28 per cent progress, whereas ACC reported a 15 per cent progress.

Shree Cement reported a revenue after tax (PAT) of ₹299.59 crore within the reporting interval, a 38 per cent decline over the identical interval final 12 months. Alternatively, Ultratech’s PAT was ₹1537.11 crore within the June 2022 ended quarter, a ten.4 per cent decline from June 2021, whereas ACC’s PAT was ₹222.17 crore (58.38 per cent decline).

Price pressures

The main fear for the cement business is rising gasoline prices, and the stress on enter prices as a result of rising volatility within the world market is affecting margins. 

Shree cement’s EBITDA margin has declined round 10 share factors YoY within the reporting quarter to 18.15 per cent, whereas ACC reported a decline of 13.1 share factors YoY to 9.7 per cent and Ultratech reported a decline of 8.6 share factors YoY to 21.35 per cent.

Shree cement reported a steep rise in energy and gasoline prices within the reporting interval. It’s energy and gasoline price as a share of gross sales was at 34.28 per cent in June 2022 quarter in comparison with 19.6 per cent in June 2021 quarter. As compared, Ultratech and ACC reported figures stood at 65.32 per cent and 58 per cent, respectively.

The logistics price of Shree cement rose 9.1 per cent to ₹914.54 crore on the finish of the June 2022 quarter in opposition to ₹838.17 crore in June 2021. The EBITDA per ton of Shree cement was at ₹1068.6, whereas Ultratech and ACC reported ₹1279.55 and ₹1149 EBITDA per ton, respectively. This may recommend that Ultratech and ACC dealt with their operations extra effectively than Shree cement within the reporting interval.

The worth of Brent at present is round $100.69 per barrel, the height was $120.89 per barrel in June quarter. The worth of coal is round $407 per ton, whereas the height in June quarter was $427 per ton.

Based on a report by Emkay analysis, home petcoke costs fell 10 per cent MoM to ₹20,144 per ton in July 2022, whereas the height in June 2022 quarter was round ₹22,380. The costs appear to have cooled down a bit, however volatility can nonetheless be anticipated as a result of unsure geopolitical scenario.

Valuation

Shree cement has corrected practically 33 per cent from its peak in September 2021. The Q1 outcomes appear to not have been satisfying for the D-street which was evident by the 7.3 per cent decline in inventory value on July 28, 2022. Nonetheless, within the subsequent buying and selling session, the inventory has made a restoration.

Shree cement is buying and selling at a ahead P/E of 32.9x, which is at a reduction to its historic common of 36.8x, whereas Ultratech is buying and selling at a ahead P/E 28.3x and ACC at 23.7x.

Outlook

On the optimistic facet, the demand within the coming months look comparatively good. The expansion is predicted to be led by the infra phase which accounts for practically 25 per cent of the entire demand. Elevated authorities capex can be a tailwind. In addition to, retail housing initiatives, together with rural housing, are anticipated to choose up.

Whereas Shree cement is buying and selling at a reduction to its historic common, gasoline price pressures will play a dominant position in figuring out the profitability of the corporate within the near-term.

Printed on

August 02, 2022

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