- 21 Jul 2022
- ICICIdirect Research
Sagar cement witnesses’ further margin erosion during Q1FY23 due to elevated cost pressure.SAGCEM - 196 Change: -2.65 (-1.33 %)
News: Sagar cement saw a further margin contraction 123bps QoQ to 10.9% (down of 2200bps YoY) during Q1FY23 on higher fuel prices. Revenues were up 42% YoY to Rs557.7 crore while company reported net loss of Rs13.1 crore on lower margins and higher interest expenses.
Views: While growth in the revenues was led by capacity expansion, the company is finding it difficult to pass on the full cost pressure due to volatile demand environment. Given the ongoing monsoon season and cost pressure we expect company to face challenges to improve margins in the near term. The stock price has already been corrected by over 25% in the past two months which we believe broadly factors these challenges. Given the performance on the expected lines, we expect neutral reaction in the stock price today.