Sagar Cement witnesses sharp margin erosion during Q2FY23SAGCEM - 266 Change: -3.90 (-1.45 %)
Sagar Cement saw sharp margin contraction 974 bps QoQ to 1.2% (down 1527 bps YoY) during Q2FY23 on higher fuel prices coupled with negative operating leverage due to monsoon. Revenues were up 28.6% YoY to Rs 474.6 crore, mainly led by capacity expansion while the company reported a net loss of Rs 49.2 crore on higher interest & depreciation expenses.
While growth in revenues was led by capacity expansion, weak demand due to monsoon restricted the company’s ability to pass on the cost pressure to the consumer. Further, given lack of clarity on the potential acquisition of AP based another cement company, we expect profitability to stay depressed on higher interest expenses pertaining to additional loan taken to the tune of Rs 500 crore for the same.