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

20 May 2022 , 10:11 PM

Result date: 21^st 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