Release Date: August 16, 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) has achieved 100% of its energy requirements through renewable solar energy since April 2018.
- The company received a prestigious award from the Bureau of Energy Standards for high-quality cement production with zero product failures.
- The company's rating has improved from BB+ with a stable outlook to BB+ with a positive outlook.
- A new cement plant is set to be commissioned by Q3 FY25, increasing total capacity to 1 million tonnes per annum.
- The company plans to enhance its solar generation capacity by 3 megawatts, increasing power generation by around 8% to 9% upon full commissioning.
Negative Points
- The cement market was pressured due to elections, resulting in no new cement dealers being added this quarter.
- The company faced a 12% dip in cement pricing, impacting revenue and profitability despite higher capacity utilization.
- The southern region's cement prices have fallen significantly, affecting revenue growth and profitability.
- The company has a high debt profile, primarily due to investments in solar energy, which impacts financial flexibility.
- The company faces challenges in adding new dealers in certain geographic locations due to market saturation and competition.
Q & A Highlights
Q: Did Shri Keshav Cements & Infra Ltd win any new clients this quarter?
A: No new clients were added this quarter due to market pressures and elections. (Venkatesh Katwa, Chairman)
Q: Are there plans to increase the number of retail touch points?
A: The focus is on deepening relationships with existing dealers rather than adding new ones. The company aims to target larger dealers and institutional consumers post-CapEx. (Venkatesh Katwa, Chairman)
Q: How does the company plan to compete with larger players in the market?
A: The company benefits from its proximity to consumer markets and lower power costs due to renewable energy. These factors provide a competitive edge despite the presence of larger players. (Venkatesh Katwa, Chairman)
Q: What is the current debt level and repayment plan?
A: The current debt is around INR190-200 crores, with a significant portion attributed to solar investments. The debt is expected to decrease post-CapEx, with a repayment plan extending up to eight to nine years. (Venkatesh Katwa, Chairman)
Q: What are the expected EBITDA margins post-expansion?
A: Post-expansion, EBITDA margins are expected to be between 36% and 37%, with significant improvements anticipated by FY26. (Venkatesh Katwa, Chairman)
Q: How will the recent 3-megawatt solar power plant addition impact finances?
A: The project cost INR13.57 crores and was financed by the supplier. Repayment terms are set for five years, starting next year. (Venkatesh Katwa, Chairman)
Q: What is the company's strategy for future capacity expansion?
A: The company plans to focus on both cement and renewable energy expansions, with specific plans to be determined based on future discussions and provisions. (Venkatesh Katwa, Chairman)
Q: How does the company view the current pricing trends in the cement market?
A: The current low pricing is seen as temporary, influenced by elections and monsoons. Prices are expected to improve by the end of September. (Venkatesh Katwa, Chairman)
Q: What is the company's approach to managing employee retention given the low salaries?
A: Most employees are local, and additional in-house benefits are provided. The salary structure is competitive within the region. (Venkatesh Katwa, Chairman)
Q: What is the company's landholding and its estimated value?
A: The company holds approximately 220 acres of land, with an estimated market value of around INR100 crores. (Venkatesh Katwa, Chairman)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
