Release Date: July 19, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Dalmia Bharat Ltd (BOM:542216, Financial) delivered a volume growth of 6.2% year-over-year, selling 7.4 million tons of cement.
- The company achieved an EBITDA of INR901 per ton, despite weaker prices.
- Dalmia Bharat Ltd (BOM:542216) has identified levers for sustainable cost reduction, aiming to reduce costs by INR150 to INR200 per ton over the next three years.
- The company is on track to complete its Northeast and Bihar expansion as per the earlier committed timelines.
- Dalmia Bharat Ltd (BOM:542216) plans to increase its renewable energy share to 50% by the last quarter of FY25, which is expected to reduce power and fuel costs.
Negative Points
- Cement demand was weak during the quarter due to factors such as heatwaves, water shortages, and floods in certain regions.
- Pan-India cement prices were softer by 2% to 3% quarter-over-quarter, with June exit prices lower by another 3% compared to Q1 average.
- The company faces uncertainty regarding the continuation of the tolling arrangement with Jaypee Associates due to its insolvency proceedings.
- Dalmia Bharat Ltd (BOM:542216) has provided INR113 crores for potential losses related to recoverable amounts from Jaypee Associates.
- The company expects prices to remain soft until the monsoon quarter, with potential price increases only from Q3 onwards.
Q & A Highlights
Q: With the development of JPA going into NCLT, what will be the tolling arrangement going ahead? Will you continue with it?
A: We are in discussion with the IRP on the modalities of the tolling operations and are hopeful to continue and improve our presence in the central markets from Jaypee plants as well as our plants in the East. - Puneet Dalmia, CEO
Q: Can you elaborate on the cost reduction target of INR150 to INR200 per ton over three years?
A: This will be achieved through VC reduction from increased RE power share, usage of captive coal mines, and reduction in logistic costs through initiatives like direct dispatches improvement. - Puneet Dalmia, CEO
Q: What is the risk of the tolling arrangement with JPA being discontinued?
A: We are in discussion with the IRP and are hopeful to continue serving the market and improve our presence. We cannot provide more details until modalities are firmed up. - Puneet Dalmia, CEO
Q: Can you provide more details on the captive coal mines?
A: Brinda and Sisai coal blocks will be commissioned this year, while Mandla coal block will be commissioned next year. They will contribute to regional profitability. - Puneet Dalmia, CEO
Q: What is the current trend of realizations versus the average of last quarter?
A: Prices are currently lower by about 3% compared to the previous quarter. We do not expect improvement in the current quarter but hope for recovery from Q3 onwards. - Puneet Dalmia, CEO
Q: What is the outlook for the cement pricing in the industry?
A: While consolidation is accelerating, it is hard to predict when pricing power will return. The trend is towards greater consolidation, which should eventually improve margins. - Puneet Dalmia, CEO
Q: Can you provide a breakdown of the INR150 to INR200 per ton cost reduction target?
A: The reduction will come from renewable energy, captive coal mines, and logistics cost improvements. Exact breakdowns are not provided as they may vary. - Puneet Dalmia, CEO
Q: What is the expected volume growth for the industry and for Dalmia Bharat this year?
A: We expect industry volume growth to be around 8%, and for Dalmia Bharat, it should be around 12%, including tolling volumes. - Puneet Dalmia, CEO
Q: What is the current booking cost of fuel?
A: The current booking cost of fuel is around INR1.38 per Kcal, similar to the previous quarter. - Dharmender Tuteja, CFO
Q: What is the company's strategy for achieving the 75 million tons capacity target?
A: We are committed to our long-term roadmap of 100 million-plus tons by 2031. We will provide a clear timeline and locations for expansion after 12 months. - Puneet Dalmia, CEO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
