Release Date: May 27, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Shri Keshav Cements & Infra Ltd (BOM:530977, Financial) reported a 34% growth in EBITDA for Q4 FY24, reaching INR11.55 crores.
- The company's EBITDA margin expanded to 32% from 29%, marking a substantial rise.
- PAT surged 213% to INR9.13 crores for FY24, with a PAT margin of 7.07%.
- The company is on track to commission a new cement plant by November 2024, increasing total capacity to 1 million tons per annum.
- Shri Keshav Cements & Infra Ltd has been recognized by the Bureau of Indian Standards for making the highest quality cement without any product failures for the past three years.
Negative Points
- Revenue growth for FY24 was only 2.89%, despite increased dispatches and robust infrastructure.
- There was a delay in the CapEx project due to water availability issues, pushing the commissioning date to November 2024.
- The company experienced a reduction in net realization prices for cement, impacting profitability despite increased dispatches.
- Debt levels have increased due to new CapEx, with INR58 crores already disbursed out of the INR80 crores sanctioned.
- The company anticipates a slow Q1 FY25 due to election-related uncertainties and a typically slow monsoon season.
Q & A Highlights
Q: What is the status of the current CapEx going on?
A: The CapEx is progressing well, despite a delay due to water availability issues. The project is expected to be commissioned by November or December 2024. Almost 95% of the machinery is already on-site, and civil construction has resumed.
Q: Can you provide any production and sales volume for cement for Q4 FY24 and the full year FY24?
A: For Q4 FY24, cement production was 72,180 tons, up from 55,000 tons in Q4 FY23. For the full year FY24, production was 246,000 tons, compared to 226,000 tons in FY23.
Q: What is the current capacity and utilization rate of the cement business?
A: In Q4 FY24, capacity utilization was 80%, up from 61% in Q4 FY23. This reflects a 30% increase in both sales and capacity utilization.
Q: Despite the annual improvement, why was there a difference in EBITDA and PAT margin compared to Q3 FY24?
A: The primary reason is a reduction in net realization prices from INR 4,000 to INR 3,500 per ton. This price drop impacted profitability despite increased dispatches.
Q: What were the main challenges or factors that limited revenue growth to only 2.89% in FY24?
A: Despite increased dispatches, prices for cement and power decreased, which offset the benefits of higher sales volumes.
Q: Can you provide an update on the status of the cement and solar expansion plans?
A: For the cement expansion, INR 102 crores out of INR 125 crores has been spent, with commissioning expected by November or December 2024. The solar expansion of 3 megawatts is expected to commence in the next 15 days.
Q: Does the Karnataka market have the capacity to absorb the increased cement production once the new plant is operational?
A: Yes, the plant's location close to the consumer market and the expected consumption within a 200-300 km radius should support significant sales improvements.
Q: How have coal and pet coke prices trended in Q4 FY24, and what is the outlook?
A: Pet coke prices have stabilized and are expected to remain stable unless there are significant political disruptions.
Q: Can you elaborate on your current dealership network and any expansion plans for FY25?
A: The company has 400-500 retail outlets and plans to expand its footprint by another 100 kilometers in all directions, including deeper penetration into Maharashtra and Karnataka.
Q: What is the expected return on investment for the current CapEx initiatives?
A: The ROI is expected to be 20-22% with significant improvements in fuel and power efficiency, leading to savings of INR 700 to INR 900 per metric ton of cement.
Q: What is your debt management strategy for the future?
A: The debt has reduced from INR 173 crores to INR 140 crores, excluding new project debt. The interest on new debt will be capitalized, minimizing its impact on the P&L.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
