Release Date: February 09, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Sales of cement improved by 10% year-over-year.
- Share of premium products increased to 27% from 26% in the corresponding period.
- Cement utilization rate rose to 74% from 70% in the corresponding period.
- Net revenue for the current quarter grew by 5%.
- EBITDA for the current quarter increased to INR402 crore from INR294 crore in the corresponding period, with a margin improvement from 15% to 19%.
Negative Points
- Cement prices were under pressure during the quarter.
- Heavy rains and cyclones in Tamil Nadu and Andhra Pradesh negatively impacted cement demand.
- Net debt increased to INR4,993 crore, with a net debt to EBITDA ratio of 3.22 times.
- Average cost of debt rose to 7.82% from 6.16% due to market rate increases.
- CapEx guidance for FY24 was revised upwards to INR2,000 crore from INR1,600 crore, indicating higher-than-expected expenditures.
Q & A Highlights
Q: Considering the CapEx that you announced in Kurnool, what would be our peak net debt going ahead?
A: The peak debt will continue to remain the same because we have planned to meet the CapEx through internal accruals predominantly. It would be around INR5,000 crores.
Q: What is your volume guidance for Q4 and FY25?
A: Q4 will be around 5 million tons, making it 17.5 million tons for the full year. For FY25, we expect around 19 million to 20 million tons.
Q: Can you provide a breakup of the CapEx for next year?
A: For Kurnool second line, we have budgeted INR750 crores. Land for Bommanahalli is around INR200 crores; maintenance CapEx is INR300 crores; balance leftover Kurnool line one project is INR200 crores; RR Nagar WHRS is INR100 crores, totaling INR1,700 crores.
Q: What is the status of the Bommanahalli project and its impact on net debt?
A: We will complete the land acquisition for Bommanahalli first. The announcement regarding the plant will come after Board approval, which will take a minimum of 12 to 18 months. Net debt will remain around INR5,000 crores.
Q: How do you plan to manage the CapEx with the current level of debt?
A: We expect free cash flow of around INR1,700 crores in FY25. Additionally, we have non-core assets that we can monetize if necessary, which can provide around INR500 crores to INR600 crores.
Q: What is the impact of the flooding in Tamil Nadu on volumes?
A: We lost around 300,000 tons due to flooding, holidays, and monsoon. Despite these challenges, we have grown year-on-year.
Q: Can you explain the increase in other expenses this quarter?
A: There are no one-off items. The absolute expenditure is about INR15 crores to INR20 crores more. On a per ton basis, it looks higher due to lower volume in the quarter.
Q: What is the current status of cement prices in the market?
A: Prices are volatile. In some markets, prices have gone up; in others, they have come down. The price drop is around INR5 to INR10 across different markets.
Q: What is the potential for de-bottlenecking the clinker capacity further?
A: There is no big scope, but we can explore another 0.5 to 1 million tons. We are continuously looking for opportunities to optimize capacity.
Q: What is the status of the ESOP program?
A: We already have an ESOP program running for the last five years. Around 7 lakh options have been granted out of the 12 lakh options reserved.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
