Shree Cement stock has been under pressure, down around 10 percent this month so far. The stock is currently trading at Rs 26,168 on the NSE. The company posted a largely in-line set of Q1 earnings.
On pricing, HM Bangur, MD of Shree Cement, said, “Last quarter, the average pricing had been good and we expect the prices to remain good. It is the cost pressure which is there, commodity prices have increased and pet coke price has increased almost two times compared to last year.”
On impact on margins, Bangur said, “We have covered our fuel up to November or so, the prices are not coming down continuously in the international market. So definitely, either the price of cement has to increase or the margins will suffer. That is not for us only, but for the entire industry, but hopefully the price will increase, such pressure cannot be continuously absorbed. It is already four months that prices have increased, but our prices in the next quarter, July-September will almost be the same as they were in June.”
On volumes, he said, “Total targeted volume will be 27 to 28 million tonnes, not a big jump compared to last year.”
On EBITDA per tonne, Bangur said, “I would not like to do that assessment, because new companies are also coming and capital investment to turnover is very low in the industry so such margins can only be better and that is the margin I still maintain will be there for a little more time. EBITDA per tonne will be around last quarter’s level, Rs 50 up or down will always happen in a commodity market.”
On demand, he said, “COVID has not affected demand. In north India, the demand is good; in eastern India, this time of the year, because of the flooding in Bihar and the disruptions, the demand is low. It will pick up after October. It is the same every year, so it’s not a big surprise. South India is doing well. So, I don't think there is any positive or negative surprises. The demand as I said, will be about 27 million tonne or so for the whole year and I am not finding a pressure on demand.”
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