- 23 May 2023
- ICICIdirect Research
SHREE CEMENTS HIGHER REALISATIONS AID PROFITABILITY IN Q4FY23
SHREECEM - 29610 Change: -80.00 (-0.27 %)News: Volumes for the quarter grew 10% YoY to 8.83 MT broadly in line with our expectations (I-direct estimate: 8.9 MT). Blended realisations grew 7% QoQ (Rs 350/t) to Rs 5419/t (I-direct estimate: Rs 5052/t). Overall revenue grew 17% YoY to Rs 4785 crore (I-direct estimate: Rs 4512 crore). Positive benefit of higher realisations was negated by increase in cost of production (increased by Rs 223/t QoQ to Rs 4408/t). company clocked in EBITDA of Rs 1011/t (I-direct estimate: Rs 1062/t, Q3FY23: Rs 882/t, Q4FY22: Rs 1134/t). Absolute EBITDA declined 2% YoY (up 26% QoQ) to Rs 892.5 crore (I-direct estimate: Rs 948.4 crore)
Views: While we have witnessed weak pricing environment during the quarter impacting realisations of other cement players (declining 1-3% QoQ), Shree Cement bucked the trend and recorded healthy improvement in realisations in Q4FY23. We believe enhanced focus on increasing share of premium cement (doubling share to 15%) has led to higher realisations. During the quarter, the share of green power consumption in total power consumption was at 54% against 50% in the corresponding quarter of the previous year. The company is working on setting up more such plants with an aim to increase the share of green energy in total energy consumption to >55% in next two years. On the capex front, the company incurred a capex of Rs 2800 crore owing to upcoming projects of enhancing capacity from 46.4 MT to 55.9 MT by FY25E (overall capex of Rs 6500 crore). The company would strive to continue being the low-cost producer and has outline various initiatives such as Increase proportion of rail dispatches, stepping up its efforts to increase use of agriculture and industrial waste to improve Thermal Substitution Rate (TSR) from current 3.9% to 15% over the next couple of years and investing in brand equity to perk up sales of premium products and fetch higher realisations
Impact: Neutral