Release Date: February 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Orient Cement Ltd (BOM:535754, Financial) reported an EBITDA of INR117 crores, achieving INR840 per tonne, which aligns with their year-end target.
- The company saw a year-to-date (YTD) growth of about 9%, in line with the industry average.
- Premium brands like StrongCrete and Orient Green have seen consistent growth, contributing to higher blended realizations.
- The waste heat recovery plant, which is 80% operational, has already provided significant cost savings, with expectations of further benefits.
- Power and fuel costs have decreased due to the use of alternative fuels and renewable energy sources, with 25% of power consumption coming from renewables.
Negative Points
- The company experienced a degrowth in volumes by 3% year-on-year and 2% quarter-on-quarter.
- B2C sales in Telangana were significantly lower, with a 29% decline, impacting overall performance.
- Freight costs increased by 4.5% year-on-year and 8% quarter-on-quarter due to higher transportation costs and the absence of lean season discounts from railways.
- The product mix has shifted towards higher OPC consumption, increasing power and fuel costs.
- The company faces competitive pricing pressures in key markets like Telangana, affecting their pricing strategy.
Q & A Highlights
Q: How significant is the Telangana market for your B2C operations?
A: Typically, South India accounts for 30% of our sales, with a substantial portion coming from Telangana.
Q: How have prices trended from September to December, and what are the January trends?
A: Prices from September to December remained stable. January has been slow, with prices staying at December levels.
Q: Can you provide the fuel cost in terms of INR per kCal?
A: At Devapur, the blended basis cost is around 1,800 INR per kCal, and at Chittapur, it’s a little under 2,000 INR per kCal. Blended, it’s approximately 1,900 INR per kCal.
Q: Will you achieve the 25% premium share target by FY24 end?
A: Achieving 25% by FY24 end is challenging but possible if the Telangana B2C market picks up. Currently, we are around 22%.
Q: What is the lead distance for the quarter?
A: The lead distance has increased by about 10-11 kilometers, now averaging around 315 kilometers.
Q: What is the net cash level as of December 31?
A: We have reduced our borrowings significantly, with total borrowings around INR 150 crores, including working capital. We prefer reducing debt over holding cash.
Q: Can you provide volume guidance for FY24 and FY25?
A: For FY24, we aim to reach around 6.2 million tonnes. For FY25, we expect growth to align with the industry average, potentially better if the Telangana market recovers.
Q: Will the Chittapur and Devapur expansions happen simultaneously?
A: We plan to start Chittapur first, followed by the Sarni grinding unit. Devapur will start later to manage our resources and bandwidth effectively.
Q: What is the percentage loss in volumes for this quarter?
A: Volumes were down 3% year-on-year and 2% sequentially.
Q: What is the CapEx guidance for FY24 and FY25, and how much debt will be taken for expansions?
A: Total CapEx for FY25 and FY26 is estimated at INR 2,000 crores. We plan to take on approximately INR 1,200 crores in debt, using cash flows to fund the rest.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
