- 22 Oct 2024
- ICICI Securities
LOWER REALIZATION IMPACTED OPERATIONAL PERFORMANCE
News: Consolidated revenue declined by 2.4% YoY to Rs 15634.7 crores, as the sales volume growth of 4.3% YoY (to 27.8 mtpa) was offset by 6.4% YoY decline in blended realization. Sequentially, revenue declined by 13.5%, led by 12.9% decline in volumes and 0.7% decline in realization. Total cost/ton was down by 3% YoY, primarily led by lower power & fuel cost/ton. Sequentially, total cost/ton was up 4%, mainly on account of higher others cost (due to plant shutdowns) and higher employee cost (due to one-time bonus). Thus, EBITDA/ton declined by 24.1% YoY (-23.8% QoQ) to Rs 725/ton. Subsequently, EBITDA was down 20.9% YoY (-33.6% QoQ) to Rs 2018.3 crores. PAT declined by 36% YoY (-51.7% QoQ) to Rs 820.0 crore. For 1HFY25, revenue remains flattish YoY at Rs 33704 crore, as volume growth of 5.5% YoY was offset by 5.4% decline in blended realization. H1FY25 EBITDA/ton stands at Rs 838/ton (-15.1% YoY), mainly on account of lower realization.
Views: Operational performance during the quarter was largely in-line with expectations. After a muted H1FY25, we expect company’s operational performance to improve in 2HFY25, led by pick-up in demand, improvement in prices and benign cost structure. Moreover, company’s focus remains on gaining market share across regions and further reduction in total cost/ton (by Rs 250-300/ton over the next 2-3 years) through improving operational efficiencies primarily led by increase in green power & fuel mix and logistics cost optimization. Company targets to reach total capacity of 214 mtpa by FY27 (including Kesoram & India Cement) from current capacity of 156 mtpa. We believe that company’s volume growth would remain better than Industry over the next 2-3 years. EBITDA/ton is also expected to improve in 2HFY25 and FY26E, driven by continuous operational efficiencies measures.
Impact: Neutral