SHREECEM Q3 FY24 earnings call.
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Revenue
₹5,193 Cr
verified against source
Revenue YoY
—
reported change
EBITDA
₹1,234 Cr
latest reported figure
Source
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record provenance
Actual signal trajectory
Where this quarter sits.
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What the record says.
Shree Cement delivered a standout Q3 FY24 with volumes up 11% YoY to 8.9 million tons, EBITDA surging 74% YoY to INR 1,234 crore, and EBITDA per ton jumping to INR 1,387 from INR 881. The beat was driven by a trifecta: higher volumes, improved realizations (+3% to INR 5,006/ton), and significantly lower fuel costs (-15% to INR 1.78/kcal). Capacity utilization improved from 72% to 77%. The company has commissioned the 3.5 MMT Nawalgarh plant and targets 75 MMT capacity by March 2027 and 80+ MMT by March 2028, requiring INR 12,500 crore CapEx. A major brand revamp under the Bangur master brand, with Magna as the premium offering and Sunny Deol as ambassador, aims to capture higher realization through brand equity. Power segment contributed INR 350 crore revenue at 10% EBITDA margin. Regional mix was 60% North, 28-29% East, 12% South. A risk is that fuel cost may not decline further in Q4 due to weighted average inventory accounting, and Q4 traditionally sees price corrections.
Colored figures show movement against the previous available record.
Guidance to track
- Currently at ~52.5 MMT. Guntur plant (3 MMT) to commission by March 6, 2024. This will bring total capacity to approximately 56 MMT.
- 65 MMT by September 2025. Ras expansion of 3 MMT at INR 600 crore (brownfield). Total CapEx of INR 12,500 crore through 2027, funded by INR 6,000 crore cash on hand and internal accruals.
- Current capacity at 977 MW. 73 MW green power commissioned January 2024 (33 MW waste heat + 40 MW solar). Additional 133 MW to be commissioned in phases through 2025, taking power sufficiency from 61% to 65%.
- Currently at ~11% and rising. Magna brand priced INR 50-60/bag above base brand. Goal is to narrow price gap over time through brand equity development and quality improvements.
Risks flagged
- Analyst asked if Q4 will see recurrence of INR 1,650 power and fuel burden. Management clarified fuel cost will remain flat at INR 1.76/kcal in Q4 due to weighted average inventory, with benefits only materializing in Q1 FY25. Further cost improvements are uncertain.
- East region grew only 2-3% sequentially and 7-8% YoY versus North (12-13% YoY) and South (10% YoY). With 21 MMT capacity planned in East by March 2026, weak regional demand could pressure utilization and realizations in the fastest-growing capacity region.
- Analyst asked about expected price rollback in Q4 and impact on margins. Management declined to give EBITDA or price guidance, stating only that cost trends should be favorable. The cyclical nature of cement pricing with elections ahead creates unpredictability for margin trajectory.
- Analyst specifically asked about an income tax demand notification. Management deflected, stating no disclosure has been sent to stock exchanges, implying no material development. However, the issue was not resolved or explained, leaving uncertainty around potential tax liability.
Key quotes
- This was a quarter where we fired all cylinders, volumes was up, realization was up, and cost was down. Sales have increased from about 8 million tons in December 2022 to about 8.9 million tons in December 2023. We are achieving a growth rate of roughly about 11%.
- If the pet coke prices have come down, our procurement prices in future will also come down. However, as I explained, the consumption is based on weighted, weighted average cost of inventory. So my inventory in last quarter was at about INR 1.76 or INR 1.77, and based on the inventory which we have and the pipeline we have, it remains the same for this quarter. Next quarter it will come down.
- We have never given any price guidance because price is not in the control of any manufacturer. We have always given cost guidance. I have already stated that my cost should tend to be lower because of the factors explained on fuel and other things. Now it is your call completely as an equity analyst or a cement industry analyst, to take a call on where the prices will go.
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