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Prabhudas Lilladher Report
Shree Cement Ltd.’s reported Q1 FY22 earnings below our/consensus estimate by 7%/2% due to higher than expected costs and lower volumes.
Ebitda/tonne expanded 3% QoQ/4% YoY to Rs 1,480 (our estimate: Rs 1,555).
Shree Cement maintained meaningful differential in Ebitda margins over its peers (Ambuja Cements Ltd. and Ultratech Cement Ltd.) on back of higher share of cheaper renewable power, indirect tax incentives and logistics advantage.
However, the gap has contracted significantly over last one year due to optimisation of realisations and extensive work on rationalisation of freight cost done by the peers.
We believe that gap would further narrow down with multi-fold increase in share of renewable power and further reduction in lead distance coupled with commissioning of new plants.
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