Shree Cement Ltd.'s shares fell as it lagged peers in the quarter ended June, though it met analyst estimates.
The cement maker saw its profit fall sequentially, dragged by a rise in power and fuel costs. Its revenue and operating income, too, declined over the preceding three months in the April-June period.
Its power and fuel costs stood at 18.9% of net sales compared with 16.1% in the three months to March. Employee benefits expenses were at 6% of net sales.
While the company's standalone volumes fell sequentially, its realisations — or what cement makers earn on every tonne of the product — rose during the period.
Shares of Shree Cement declined as much as 3.8% as of 12:10 p.m. on Tuesday. Of the 44 analysts tracking the company, 14 have a ‘buy' rating, 18 recommend a ‘hold', and 12 suggest a ‘sell', according to Bloomberg data. The average of the 12-month consensus price target implies an upside of 2%.
Here's what analysts have to say about Shree Cement's first-quarter FY22 results...
Jefferies
Maintains ‘hold'; hikes target price from Rs 25,000 apiece to Rs 27,000.
Shree's reported realisations were ahead of estimates.
Strong realisation in the east should have helped.
Earnings impacted by energy price inflation and other costs.
Shree's volumes grew 40% YoY on a low-base to 6.8 million tonnes.
Tweaks FY22-23 Ebitda estimates by 2-3% as higher realisations to be offset by higher fuel costs.
CLSA
Maintains ‘underperform' rating, with a target price of Rs 28,300 apiece.
Q1 Ebitda in line with expectations; valuations demanding.
Volume fell 17% QoQ and was slightly better than pan-India peers.
Two-year volume CAGR of 6% was better than industry.
Lower freight and other expenses partly offset power cost inflation.
Power costs have likely been impacted by higher petcoke/coal costs.
Cuts FY22-24 Ebitda estimates by 3-5% to incorporate recent trends.
Goldman Sachs
Maintains ‘neutral' rating, with a target price of Rs 29,100 apiece.
Volume growth and realisations lagged larger peers; but base was stronger.
Power and fuel costs (+27% QoQ) and other expenses (+8% QoQ) well above expectations and peers; higher costs driven by minimal low-cost pet coke inventory during the quarter.
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