Release Date: October 24, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Sagar Cements Ltd (BOM:502090, Financial) anticipates improvements in business margins and profitability due to enhanced energy mix and increased reliance on renewables.
- The company is committed to long-term objectives of cost reduction and operational enhancements.
- Sagar Cements Ltd (BOM:502090) is optimistic about capturing growing infrastructure and real estate demand due to enhanced capacity.
- Efforts towards diversifying revenue streams and increasing regional footprint are expected to improve overall profitability.
- The company has received incentives from the government, which positively impacts its financials.
Negative Points
- Q2 performance was muted due to demand and pricing challenges, with overall volumes at 1.16 million tons.
- Revenue for the quarter decreased by 19% compared to Q2 FY24, and margins dropped from 10% to 4%.
- The company reported a loss after tax of INR57 crore for the quarter, compared to a loss of INR11 crore in Q2 FY24.
- Pricing environment remains competitive, with some regions experiencing price declines.
- Gross debt stood at INR1,482 crore, with a net debt of INR1,293 crore, indicating a significant debt burden.
Q & A Highlights
Q: What impact will the recent consolidation in the cement industry have on Sagar Cements?
A: Sreekanth Reddy, Joint Managing Director, stated that consolidation is generally positive for the sector as it reduces competitive intensity and can improve pricing power in the medium to long term. However, in the short term, there might be some disruptions. The impact on Sagar Cements is expected to be limited due to its market footprint.
Q: How is the current demand and pricing trend in your market, and what is the current capacity utilization?
A: Sreekanth Reddy mentioned that demand is expected to improve post-Diwali. Currently, prices have seen some downward pressure, particularly in South India, while there have been price increases in MP and Odisha. Capacity utilization varies across plants, with some operating at lower levels due to demand challenges.
Q: What is the current net debt level of Sagar Cements?
A: The net debt stands at approximately INR 1,293 crore, as confirmed by Sreekanth Reddy.
Q: Can you provide an update on the expected volume growth and EBITDA for the second half of the fiscal year?
A: Sreekanth Reddy indicated that they are targeting a volume of 1.75 to 1.8 million tons for Q3, with the rest expected in Q4. The EBITDA outlook remains flat, but they expect better clarity by the end of Q3 as demand normalizes.
Q: What are the expectations for demand and pricing in the southern market for the next fiscal year?
A: Sreekanth Reddy expressed optimism for the coming year, expecting demand to recover as weather conditions improve. However, he noted it is too early to provide a detailed outlook for FY26.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
