Shree Cement sees 4% increase in revenue in 1Q22

Shree Cement has reported a 3.9 per cent YoY uptick in revenue to INR40.99bn (US$527.8m) in the opening quarter of 2022. Sales volumes over the same period slipped two per cent to 8Mt, while EBITDA declined to INR10.49bn, compared to INR13.04bn in the 1Q21. The EBITDA margin contracted from 31.97 per cent in the 1Q21 to 24.75 per cent this year.  

According to BusinessLine Online, the growth in revenue is being attributed to price increases as cost pressures and inflation continue to hamper all players in the Indian market. The average all India cement price advanced by five per cent YoY to INR379/50kg bag in the 1Q22. Meanwhile, diesel prices in Delhi were up 11 per cent YoY to an average of INR87/l, while material costs increased by 5.9 per cent. Power and fuel costs over the 1Q22 also advanced, up by 68.7 per cent YoY with the average price of imported coal coming in at around US$296/t. According to Nomura, domestic petcoke prices grew by more than 50 per cent between February and April 2022, tipping it over the INR20,000/t mark. As a result, Shree Cement saw its profits in the 1Q22 contract by 16.2 per cent to INR6.45bn.  

The opening three months of 2022 saw the company announce the commissioning of a 3Mta grinding unit at Puna, according to IDBI Capital. Operations also began at its 4Mta clinker unit at Raipur. Other expansions in the pipeline include a 3.5Mta plant in Navalgargh, Rajasthan and a 3Mta unit at Purulia, West Bengal. In FY22, inclusive of maintenance capex, the company has spent INR22bn.  

Cement demand is expected to improve in FY23 on the back of increased government spending. All producers in the Indian market are having to pass the rise in input costs onto the consumer, as was evident in April this year when cement prices reached INR407/50kg bag. Prices are forecast to rise further as input cost pressures continue.