Sagar Cements - Q3FY21 First Cut - ICICI Direct

CMP: Rs. 735; Market cap: Rs. 1730 crore

Sagar cements reported healthy set of numbers with EBITDA growing 5x vs last year during Q3FY21, though it was down marginally by 0.3% on QoQ basis. The overall results remained marginally ahead of our estimates mainly on account of better sales volumes led by pick-up in infra activities in in AP/Telangana.

Q3FY21 Earnings Summary

- Revenues grew by 38.8% YoY to Rs. 363.7 crore (above our estimated revenue of ~Rs. 357.7 crore. Sales volume recorded double digit growth of 12.6% YoY to 0.86MT. Realisations also remained firm at Rs. 4229/t (up 23.2% YoY) in AP and Telangana region. However, it corrected by 6.3% QoQ. The plants during the quarter operated at 58% vs 52% last year and 50% in the last quarter.

- EBITDA margin for the quarter came in at 28.7% vs 7.6% LY. However, it declined by 344bps QoQ. Sharp jump being witnessed in the raw material cost (up 24% QoQ to Rs. 812/tonne). However, it was down by 11.8% on YoY basis. Freight cost increased by 3.7% on per tonne basis to Rs. 741/tonne due to rise in the diesel prices. Optimal thermal efficiency and usage of alternative fuel helped in keeping power cost lower for the quarter.

- Overall, company managed to reduce total production cost per tonne by 4.9% YoY to Rs. 3015/t (down 1.5% QoQ). As a result, EBITDA/t increased sharply by 367% YoY to Rs. 1,214/t (vs. I-direct estimate of Rs. 1,206/t). On an absolute basis, EBITDA stood at Rs. 104.4 crore, up 426% YoY, flat QoQ (vs. I-direct estimate of Rs. 98.9 crore)

- Higher operating profits and low interest costs led to company reporting net profits of Rs. 49.6 crore for the quarter vs (I-direct est: Rs. 45.5 crore). The company has declared second interim dividend of Rs. 2 per share (ie. 20% of face value)

Ongoing greenfield projects of Satguru Cement Private Limited, Madhya Pradesh and Jajpur Cements Private Limited, Odisha progressing as per schedule. Post this expansion, the total capacity will increase to 8.25MT. We would be coming out with a detailed report post the conference call.

Shares of SAGAR CEMENTS LTD. was last trading in BSE at Rs.735.9 as compared to the previous close of Rs. 742.3. The total number of shares traded during the day was 10352 in over 853 trades.

The stock hit an intraday high of Rs. 752 and intraday low of 729.4. The net turnover during the day was Rs. 7710190.

Source : Equity Bulls

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