Shree Cement beats Q2 sales, earnings estimate but higher fuel costs weigh
Shree Cement, the third-largest cement company in India, posted better-than-expected numbers for the second quarter ended September with both revenue and profit coming ahead of what analysts had forecast.
The company’s standalone net profit rose 6% to Rs 577 crore from Rs 547.25 crore a year earlier. However, profit declined 12.8% from Rs 662 crore in the first quarter through June.
Net sales rose 5% to Rs 3,206 crore year-on-year, though it declined from Rs 3,450 crore in the first quarter.
The second quarter is typically a low-demand quarter due to the monsoon season in much of the country that affects construction activity.
Analysts had expected revenue to come in the region of Rs 3,100-3,200 crore while net profit was projected to be around Rs 500 crore.
The company’s EBITDA also came ahead of expectations despite the impact of higher fuel cost.
Power and fuel costs rose 29% to Rs 628 crore from Rs 486 crore a year earlier while raw material costs moved up around 7% in the same period. This was much higher than what UltraTech experienced last quarter and marginally ahead of ACC in the same period.
Earlier this month, UltraTech had said its cost structure saw a spike as coal and pet coke prices nearly doubled in the quarter resulting in energy costs shooting up 17% year-on-year. Ultratech’s consolidated net profit was almost flat at Rs 1,313 crore year-on-year and declined 22.8% sequentially due to the impact of higher fuel and logistics costs during the quarter.
Shree Cement’s share price rose 1.66% to end the day at 28,659.4 apiece in a weak Mumbai market on Friday. The shares are up almost 38% from their one-year low.
The company also said that it had raised Rs 2,383 crore through a qualified institutional placement two years ago and has used a little over a third of the amount as of September 30, 2021.
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