Release Date: July 19, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Revenue for the quarter increased by 4% to INR561 crores compared to INR540 crores in Q1 FY24.
- EBITDA for the quarter rose to INR47 crores from INR31 crores in Q1 FY24, with margins improving from 6% to 8%.
- Operational efficiencies and a higher share of renewable power are expected to improve profitability and margins in the coming years.
- The company is progressing well with its expansion plan in the Andhra Cements Limited unit.
- Board approval for setting up 6-megawatt solar power plants at Gudipadu and Dachepalli aligns with the company's ESG roadmap.
Negative Points
- Q1 was marked by muted demand and realizations, leading to lower volume offtake.
- Loss after tax stood at INR32 crores for the quarter, though it was an improvement from a loss of INR42 crores in Q1 FY24.
- Prices remained largely benign across key markets due to subdued demand and heightened competitive intensity.
- The company expects Q2 to be as challenging as Q1, impacting overall performance.
- Gross debt as of June 30, 2024, stood at INR1,462 crores, with a significant portion being long-term debt.
Q & A Highlights
Q: Can you confirm the volume guidance of 6.5 million tonnes for the year despite the lower volumes this quarter?
A: Yes, we are confident about achieving the 6.5 million tonnes volume guidance, excluding clinker sales. We expect the overall EBITDA to be in the range of INR350 crores to INR375 crores, translating to around INR575 EBITDA per tonne.
Q: How have prices moved from Q4 to Q1, and what are the state-wise trends?
A: Prices have dropped by INR5 per bag from the end of Q4 to the middle of this month. From Q4 to Q1, there was an average drop of INR10 per bag, with significant declines in Tamil Nadu.
Q: Will the recent M&A activities in the cement sector affect realizations in H2?
A: While some assets may ramp up utilization, we believe the ability for prices to go down further is limited. We expect prices to pick up in line with demand ramp-up from the middle of Q3.
Q: What is the status of the INR30 crore incentive for Madhya Pradesh?
A: We expect to receive the incentive in the current month. The entire INR30 crore should be recorded this year.
Q: What was the clinker sale volume and realization for this quarter?
A: We sold around 89,000 tonnes of clinker at an average realization of INR3,050 per tonne.
Q: Are fuel costs expected to remain stable from Q1 averages?
A: Yes, we have covered more than two-thirds of our volume as inventories, so we expect fuel costs to remain flat.
Q: What is the impact of new capacities in South India on supply and pricing?
A: New capacities and ramp-ups are happening in a phased manner. We expect demand to pick up from the middle of Q3, which should balance the supply.
Q: What is the expected demand and pricing scenario post the political outcomes in Andhra Pradesh?
A: The government is committed to developing Amravati, but significant demand from this project is expected to start from the later half of this year or next year.
Q: What is the status of the Vizag land sale?
A: The status remains the same as the last call. We expect to monetize the land by the end of this fiscal year.
Q: What are the interim targets for renewable energy capacity?
A: We aim to achieve 50% renewable energy by FY30. For FY25, we plan to commission 6-megawatt solar plants at Gudipadu and Dachepalli.
Q: What is the pricing and demand scenario in the central region?
A: The central region, particularly western Madhya Pradesh, has seen a 15% year-on-year decline in demand. Gujarat is trending upward but is still 5% lower year-on-year.
Q: What is the expected cost reduction from the current CapEx plan?
A: We expect to save around INR250 per tonne up to clinker and INR125 per tonne at the cement level once the entire CapEx plan is implemented.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
