- Total Volume: Increased from 8.92 million tonnes in Q1 2024 to 9.64 million tonnes in Q1 2025, an 8% growth.
- Utilization Rate: Stood at about 76% for the quarter.
- Revenue Realization: Decreased by 6% from INR 4,771 per tonne to INR 4,469 per tonne.
- Average Fuel Cost: Reduced from INR 2.34 CV last year to INR 1.76 CV this quarter.
- Total EBITDA: Marginally decreased by 2% from INR 933 crores to INR 916 crores.
- EBITDA per Tonne: Fell from INR 1,046 last year to INR 950 this quarter.
- Sequential Volume Growth: Up 1% from 9.53 million tonnes to 9.64 million tonnes.
- Sequential Revenue Realization: Dropped by 5% from INR 4,721 per tonne to INR 4,469 per tonne.
- Sequential Total EBITDA: Decreased from INR 1,327 crores to INR 916 crores.
- Sequential EBITDA per Tonne: Fell from INR 1,392 to INR 950 per tonne.
- New Plant Commissioning: Integrated cement unit in Guntur district, Andhra Pradesh with a production capacity of 3 million tonnes per annum.
- Ongoing Expansion Projects: Totaling about 15 million tonnes across various locations.
- Installed Power Capacity: Reached 1 gigawatt with the commissioning of a 19.5 megawatts solar power plant.
- RMC Business: Now has 7 plants with a total capacity of 624 cubic meters per hour.
- Green Power Share: Stands at about 54% of total electricity consumption in Q1 2025.
- Alternate Fuels Usage: Used 0.27 lakh tonnes of agro waste and 0.78 lakh tonnes of hazardous waste in Q1 2025.
- Water Positivity: Achieved levels of more than 6x in Q1 2025.
Release Date: August 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Shree Cement Ltd (BOM:500387, Financial) achieved an 8% year-over-year increase in total volume, from 8.92 million tonnes to 9.64 million tonnes.
- The company commissioned a new integrated cement unit in Andhra Pradesh with a production capacity of 3 million tonnes per annum.
- Shree Cement Ltd (BOM:500387) reached a significant milestone of 1 gigawatt of installed power capacity, including a mix of solar, wind, thermal, and waste heat recovery power plants.
- The company is expanding its solar power capacity by 135 megawatts across various locations, enhancing its renewable energy footprint.
- Shree Cement Ltd (BOM:500387) launched a new greenfield ready-mix concrete plant in Hyderabad, bringing the total number of plants to seven with a capacity of 624 cubic meters per hour.
Negative Points
- Despite the volume increase, the company's total EBITDA marginally decreased by 2%, from INR 933 crores to INR 916 crores.
- Realization per tonne dropped by 5% from INR 4,721 to INR 4,469, impacting overall profitability.
- Other expenses increased due to stabilization costs following the commissioning of new plants and higher advertisement expenses.
- The company faced challenges in the North region due to competitive pressures, leading to a decline in volume growth in that area.
- The demand in Q1 was weak, and the management anticipates continued weak demand in Q2 and Q3, which could further impact pricing and profitability.
Q & A Highlights
Q: Can you elaborate on the change in geographic mix and provide regional volume streams for Q1?
A: Growing at a greater pace than peers has costs. The cost estimation for additional volume was based on April prices, which deteriorated. There was a marginal shift from North to East, the lowest realization region, affecting weighted average realization and EBITDA. Lead distance increased by 21 kilometers, impacting logistics costs. Stabilization expenses for new plants also increased. Region-wise growth: 7% in North, 15% in East, and -5% in South. Quarter-on-quarter: -3% in North, +11% in East, and -4% in South.
Q: What was the impact of the change in geography on realization?
A: The average realization in North was INR 4,641, in East INR 4,154, and in South INR 4,620. Sales percentages were 55% in North, 35% in East, and 10% in South. The shift to East, a lower realization market, and falling prices affected the weighted average realization.
Q: How will the turmoil in Bangladesh affect volumes from Northeast India?
A: We don't sell in Bangladesh. Bangladesh's market surplus and economic issues will have no impact on India.
Q: How much of the increased costs due to Guntur and regional mix can revert in the next quarters?
A: About INR 52 crores in this quarter represents additional stabilization costs for Guntur and Nawalgarh. Ideally, no further expenditure should be needed, but stabilization periods can vary from 3 to 12 months.
Q: What is the price trend noticed in core markets for July?
A: Pricing is a function of demand. Weak demand in Q1 affected prices. No major demand revival in July or August. Q2 and Q3 are expected to remain weak due to delayed government budget approvals and festive season impacts.
Q: Will Shree Cement achieve the 40 million tonnes volume target for FY25?
A: We are growing in tandem with the market. The guidance is toned down to reflect market conditions. If we can do better, we will update accordingly.
Q: Why has the depreciation rate increased significantly?
A: Depreciation is a function of increased capital assets. With current capacity, expect about INR 2,600 crores in depreciation. Focus on cash profit numbers, which have not fallen much despite challenges.
Q: What is the guidance for the cash tax rate for the year?
A: The cash tax rate is dependent on profit before tax, which follows EBITDA. Without an EBITDA guidance, it's difficult to predict the cash tax rate.
Q: What is the expected fuel cost trend?
A: The average fuel cost is INR 1.74 per kCal based on committed orders. It may decrease as new orders are released at lower rates.
Q: What is the expected power mix for renewable energy?
A: Currently at 54%, expected to increase to 62% by June 2025.
Q: What is the annual run rate of cash incentives or subsidies?
A: Subsidies are recognized only when realized in cash. The run rate depends on state government financial positions and release timings.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
