Sagar Cements Ltd Research ReportQ2

Strong operational performance… Sagar Cement reported a robust performance with EBITDA, PAT growth of 2.5x, 10x, respectively, in Q2FY21. Revenues grew 22.8% YoY to | 325.9 crore (vs. I-direct estimate: ~| 319 crore). Sales volumes recovered with growth of 1.7% YoY to 0.72 MT (above pre-Covid levels). Realisations improved sharply by 20.8% YoY to | 4512/t (down 5.5% QoQ) in AP and Telangana region. The plants during the quarter operated at 50% vs. 49% last year. As the company uses 100% petcoke, usage of low cost petcoke inventory (prices down 27% YoY) helped it to reduce power & fuel cost by 28% YoY to | 844/t. Freight costs, however were up 10% YoY to | 769/t due to increase in lead distance from 288 km to 319 km along with increase in diesel prices. Overall, the company managed to reduce total production cost per tonne by 2.4% YoY to | 3062/t. As a result, EBITDA/t increased sharply by 143% YoY to | 1,451/t (vs. I-direct estimate of | 1,365/t) and margins doubled YoY to 32%. Higher operating profits and low interest costs led the company to report 919% YoY growth in net profit to | 50.2 crore for the quarter vs. I-direct estimate of | 43.5 crore. Gross debt was at | 527 crore with D/E of 0.35 for the quarter. The company declared an interim dividend of | 2/share (i.e. 20% of face value).