SHREECEM Q2 FY24 earnings call.
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Revenue
₹4,774 Cr
verified against source
Revenue YoY
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reported change
EBITDA
Pending
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Actual signal trajectory
Where this quarter sits.
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What the record says.
Shree Cement delivered a strong Q2 FY24 with PAT doubling YoY to INR 1,072 crore, driven by improved cement realizations (INR 4,843/ton, +1% YoY, +2% QoQ) and better operating efficiency. Volume grew 10% YoY in Q2 and 14% in H1, with capacity utilization improving to 76% from 66% last half year. Power and fuel cost per ton declined from INR 295 to INR 253 YoY, supported by rising green power mix (58% vs 51% last year). The company maintains its 80 million ton capacity target by March 2028 (12% CAGR), with 56 MTP by end FY24 and 62 MTP by March 2025. Management expects Q3 to be even better with higher realizations and lower fuel costs. Key risks include competitive intensity from larger players (Adani), lower utilization in East India (74% vs 92% in Q1), persistent IT survey overhang, and profitability gaps between North and East regions. Premiumization strategy targets 12% share with focus on right pricing over volume chase.
Colored figures show movement against the previous available record.
Guidance to track
- Management expects cement volume growth of approximately 12% for FY24, supported by 14% H1 performance and new capacity additions coming online in Q4 (Guntur, Nawalgarh).
- Current capacity will reach 56 MTP by end FY24, adding 6 MTP more by March 2025 (Guntur and Nawalgarh commissioning in Q4 FY24, delayed by ~3 months). Target of 80 MTP by March 2028 at 12% CAGR.
- Cost per kcal expected at INR 1.90 for the next six months (vs INR 2.05 in Q2), reflecting benefit of lower pet coke/coal prices and new green power capacity coming online.
- Premium products currently at 9.5-10% of sales, expected to reach approximately 12% in the next six months through focused pricing strategy over volume chasing.
Risks flagged
- The Income Tax survey conducted in June appears completed with no fresh questions for 1-2 months, but final resolution remains uncertain. Management has provided clarifications but the matter may still have potential implications.
- North India profitability is 30-40% higher than East India, though recent price hikes in East have narrowed the gap. Management acknowledges East margins are significantly lower, creating uneven profitability across markets.
- East India utilization dropped sharply from 92% to 74% QoQ due to new Purulia capacity addition. The 3.4 MTP Baloda Bazar grinding unit (18-month completion timeline) will further pressure utilization before demand catches up in 2027-28.
- High port handling costs (INR 3,000/ton) make India imports economically unviable. Despite having Union Cement operations, meaningful revenue contribution from Indian market remains stuck due to unfavorable logistics economics.
Key quotes
- Our volumes will grow very gradually, but our prices and premiumization is at the level at which we wanted. Premiumization for the sake of premiumization by investing more, giving a better higher cost material with lower realization, lower EBITDA is not the idea.
- We are already 58% renewable power, and it will come to 62%, 63% in the coming six- to eight-month period. Is it not a big cost advantage? Which company has even 50%. We talk of not marginally lower, I am talking of 30% renewable power, and we have 58% renewable power. That is quite a big advantage.
- Last year, same quarter, power sale was INR 46 crore, and this year it is INR 343 crore. So INR 300 crore increase in power sale, means around INR 250 crore increase in the coal and power, power and fuel cost. This is the reason when we are talking of the totality.
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