BQ Prime's special research section collates quality and in-depth equity and economy research reports from across India's top brokerages, asset managers and research agencies. These reports offer BQ Prime's subscribers an opportunity to expand their understanding of companies, sectors and the economy.
ICICI Direct Report
We recently met the management of Sagar Cements Ltd. and visited its plant in Mattampally to understand the business and the industry outlook.
Currently, industry utilisation rates are hovering in the range of ~70%. The management expects demand to grow at a steady compound annual growth rate of 6% to 425 million tonne in FY25E. We expect demand growth in the southern region to accelerate at 8-10% in FY24E owing to higher infra spending in the pre-election year.
From April 12, 2023, Andhra Cement is expected to start dispatches with clinker being supplied from Sagar Cement's plant in Mattampally. The company expects to begin clinker operations from middle of June 2023.
The company is aiming to increase the share of blended cement from the current 50% to 60% with increase in utilisation rates from the newly commissioned plants in Jajpur, Odisha and Jeerabad, Madhya Pradesh.
Sagar Cements continues to be one of the lowest cost producers in the southern region (~12-15% lower than the industry). With softening of pet coke prices (current landed cost ~ $165/tonne), the company has contracted to import pet coke consignment. Benefit of lower fuel cost is expected to be reflected by Q1 FY24. We expect Ebitda/tonne to improve gradually to Rs 700/tonne in Q1 FY24.
Recent attempt at price hikes (~Rs 10-15 per bag) was rolled back as players are targeting volume growth. Prices in Hyderabad and Bangalore remained flattish QoQ whereas Chennai and Cochin witnessed a decline in prices. Another attempt at a round of fresh hikes is expected by the end of March.
Click on the attachment to read the full report:
DISCLAIMER
This report is authored by an external party. BQ Prime does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BQ Prime.
Users have no license to copy, modify, or distribute the content without permission of the Original Owner.
Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.
