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Q4FY22 Preview: Shree Cement: Revenue seen at Rs40,867 million, EBITDA at Rs9,836 million

Weak performance on profitability likely on the cards

May 20, 2022 10:11 IST | India Infoline News Service
Result date: 21st May, 2022
Recommendation: Reduce
Target price: Rs25,000

Shree Cement’s volumes could decline in the March 2022 quarter as compared to the year-ago quarter owing to the higher base back then. Sequentially though, volumes could grow by ~22%. Growth in realizations could drive 4% increase in revenue versus the year-ago quarter.

Rising prices of key inputs, namely, petcoke and imported coal could lead to a sharp increase of 27% in cost of production as compared to the year-ago quarter. This, along with higher operating cost could have a bearing on the company’s gross margin. Price hikes of about 2% though could arrest the decline in EBITDA to 16.4% on a year-on-year basis. EBITDA per ton could also decline, in sync with escalating costs.

Important management insights to watch out for:
·         Demand trends across key markets
·         Outlook on input costs, price hikes and margins
 
March 2022 estimates YoY change QoQ change
Volumes (m MT) 8.0 (3)% 21.6%
Realization (Rs/t) 5,129 7.2% (5.4)%
Revenue (Rs mn) 40,867 4.0% 15.1%
EBITDA (Rs mn) 9,836 (16.4)% 19.1%
Ebitda (Rs/t) 1,234 (13.9)% (2.0)%
Source: IIFL Research

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