Shree Cement net profit declines 20% in Q4

Shree Cement Ltd on Monday reported a consolidated net profit of ₹525.77 crore in the March quarter, down 20% from ₹657.24 crore in the same period last year.

However, on a sequential basis, the company’s performance improved sharply and net profit grew 86.4% over the previous quarter’s ₹282.07 crore. Notably, the profit beat the ₹438.5 crore consensus estimate of analysts polled by Bloomberg.

Although higher costs continue to hurt its cement business on a y-o-y basis, cement prices have not kept pace with rising costs. However, on a sequential basis, a sharp improvement in sales volume, declining raw material costs and operating efficiencies helped drive its earnings improvement.

The total cement sales volume for the quarter, at 8.83 million tonnes (mt), was up 10% sequentially as well as on year-on-year basis, over 8.03 mt clocked by the company in Q3 and the year-ago quarter.

This lifted the company’s cement business performance, better reflected in its standalone numbers. The standalone revenues from operation at ₹4,785 crore grew 18% sequentially and 17 % year-on-year. A sequential decline in costs meant that the company’s standalone operating Ebitda at ₹892 crore grew 26% sequentially but was still down 2% year-on-year. Ebitda is earnings before interest tax depreciation and amortization.

The Ebitda per tonne of the cement business as per analyst calculations at ₹1,011 declined ₹123 over the year-ago quarter but improved ₹129 sequentially .

Shree Cement’s standalone net profit at ₹546 crore, though down 15% year-on-year, almost doubled from ₹277 crore in the previous quarter, higher than Bloomberg estimates.

The company has been actively working on achieving its goal of beyond 80 million tonnes capacity. The commissioning of Purulia grinding unit with capacity of 3 MTPA is scheduled by end of Q1 FY24. Nawalgarh project with 3.5 MTPA capacity is progressing on schedule, and the company expects the commissioning to be achieved by the end of Q3 of FY24. It is also progressing strongly on its project in the Guntur district of Andhra Pradesh, which should be commissioned early next financial year.

“We continue to execute sharp action plans to reach beyond 80 million tonnes cement capacity in the coming years. Our growth plan will add significant value to our business and provide opportunities for all our stakeholders,” said Neeraj Akhoury, managing director, Shree Cement Ltd.

During the quarter, the share of green power consumption in total power consumption stood at 54.6%, against 50.1% in the year-ago quarter. The company completed commissioning of 122 MW of solar and wind power plants in different states helping raise its aggregate green power generation capacity to 385.5 MW as at the close of FY23. Another 93 MW of green power capacity is expected to be completed in FY24 and FY25 along with commissioning of new project sites. With this, the company aims to increase the share of green power consumption in total power consumption to more than 55% over FY24 and FY25.

“We are driving prioritized initiatives to increase green power, usage of alternative fuels, process automations combined with advanced digitalization of the operations to deliver superior performance,” said Akhoury. The improved performance during the quarter is testimony to such initiatives amidst the challenge of managing high fuel costs, he added.

The company’s consolidated revenues—including contributions from the power business—at ₹5,100 crore grew 18.63% sequentially and 16.7% year-on-year. The Ebitda at around ₹889.2 crore too improved from ₹656.6 crore in the previous quarter, but was lower than ₹918.8 crore in the year-ago quarter.