Shree Cement is expected to declare a year on year decline of 6-8 percent in standalone profit after tax (PAT) for the quarter ended March on May 21. However, revenues are expected to improve 10 percent.
Experts expect the cement major to register a profit of Rs 710 – 740 crore for the quarter with revenues of Rs 4,360 – 4,380 crore.
Growth in revenue will be aided by higher increase in blended realisations on a yearly basis but the marginal decline in volumes and the high base of the same quarter last year will result in muted year on year growth.
Sequentially the Rajasthan based company is expected to post healthy growth of 23 percent in revenue aided by higher volumes while profit is expected to grow 45 percent due to higher volumes and stable realisations partially negated by rising variable costs.
Brokerage views
Brokerages expect the cement volumes to decline on year due to the high base of last year. On a sequential basis though volumes are expected to show remarkable growth.
“We estimate volumes of 8 million tons, a decline of 3 percent YoY and growth of 22 percent on quarter factoring strong sequential recovery due to seasonality; however, high base of Q4FY21 are expected to keep the YoY growth muted”, a report from Kotak Institutional Equities said. The brokerage estimates blended realizations to increase 13 percent on year and 1 percent quarter on quarter impacted by lower exit prices of Q3FY22 and back-ended price strength in Q4FY22.
Experts expect 4-5 percent sequential increase in power-fuel cost led by higher pet coke/thermal coal prices in the past six months leading to ~1-3 percent quarter on quarter increase in costs/ton during the quarter.
Gross margins are expected to be impacted due to the higher variable costs compared to the same period last year.
Cement EBITDA/ton (earnings before interest, tax, depreciation and amortization) is likely to decline 6-8 percent on year but improve by 7-9 percent on quarter to Rs 1,345 – 1,375 per ton.
The sequential growth in cement EBITDA/ton is likely to be led by a combination of higher realizations and operating leverage, partially offset by higher variable costs.
EBITDA margins are expected in the range of 24.8-25.4 percent for the quarter which is a decline of 450-500 bps compared to last year period but on a sequential basis, there is a likely improvement of 150-200 bps.
Estimates
The brokerage firm JM Financial pegs the revenues for the quarter at Rs 4,365 crore with a year on year growth of 10 percent and a sequential growth of 23 percent.
PAT is likely to come in at Rs 748 crore with a 3 percent on year decline but a sequential growth of 52 percent.
Axis Securities has a revenue estimate of Rs 4,385 crore at a growth of 12 percent on year and 23 percent quarter on quarter.
EBITDA margins for the quarter are likely at 25.6 percent resulting in a PAT of Rs 721 crore. It expects the PAT to decline 6 percent compared to the same period last year but on a sequential basis it sees the PAT improving by 46.5 percent.
As per the estimates of Kotak Institutional Equities, the revenues for the company are seen improving by 10.3 percent year on year to Rs 4,364 crore, a sequential growth of 23 percent.
EBITDA margins at 24.6 percent are seen declining by 525 bps from last year quarter. However, from the previous quarter of current fiscal, the margins are likely to improve by 140 bps.
It forecasts a PAT of Rs 702 crore, declining by 8.5 percent year on year but increasing by 43 percent from the previous quarter.
Shree Cement ended Rs 215.15 lower at Rs 22,001.20 on May 20 at The National Stock Exchange. The stock has declined 20 percent during the past one year and is down 14 percent over the past one month.
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