Star Cement hosted
conference call on February08, 2024. In the conference call the company was
represented by Mr Tushar Bhajanka-Deputy Managing Director, Mr Vinit Kumar
Tiwari-CEO and Mr Manoj Agarwal-CFO.
Key takeaways of the call
Volume
Clinker production
stood at 7.37 lac tonnes in Q3FY2024 as against 7.39 lac tonnes in Q3FY2023
Cement Production
stood at 9.82 lac tonnes in Q3FY2024 as against 9.22 lac tonnes in Q3FY2023.
Cement sales of 9.67
lac tonnes in Q3FY2024 as against 9.08 lac tonnes in Q3FY2023.
Cliker sales stood at
.03 lac tonnes in Q3FY2024 against nil in corresponding previous year.
Geography wise North
East sales stood at 7.32 lac tones in Q3FY2024 as against 6.62 lac tonnes in Q3FY2023.
Outside North East sales stood at 2.38 lac tonnes in Q3FY2024 as against 2.45
lac tonnes.
Revenue for the quarter stood at Rs 655 cr in
Q3FY2024 as against Rs629cr in Q3FY2023.
EBITDA per ton stood at Rs 1576/ton as
against Rs1324/ ton.
Trade sales stood at 87%
of the total sales in Q3FY2024 and Non trade stood at 13% in Q3FY2024.
Premium contribution
stood at 6.5% of the trade sales as against 4.5% in Q3FY2023 up 47% YoY.
Lead distance stood at
215 kms in Q3FY2024.
Power and fuel:
Power cost per K cal
stood at Rs 1.75/ K cal and expects to remain around 1.7/ for Q4FY2024
Expansion: The company is setting up a 3 million ton clinker plant which is
expected to be commissioned by Mar 31, 2024.
The company is setting
up a 2 million ton grinding unit in Assam which is expected to be commissioned by
March 01,2024.
Delays in
commissioning of clinker unit and grinding unit in Guwahati are on account of
more time in trial runs and due to delays in delay of delivery of machinery.
Also the company plans
to set up a grinding unit in Silchar. The same is expected to be commissioned
in Aug –September of calendar year 2025.
Expansion outside North
East: The company is looking out for mines in Rajasthan and in South India .
Once it finalizes on mines will go ahead with the expansion.
The company plans to
take the total capacity to 20 MT from the current 10 MT by FY2030. Most of it
will be organic growth however the company is open to acquire mines through
inorganic route.
The same will be
funded through both internal accruals and from outside sources .
AAC project: The AAC
project is expected to be commissioned in August of calendar year 2024. The AAC
business has margins of 25% and has ROCE of 20%.
Incentive:
The company has input
credit which the company will utilize in 2-2.5 months starting march 2024.
The company will
receive SGST benefit of Rs 150-200 cr (per year)for next 5-7 years for grinding unit of
Guwahati.
The company will
receive around Rs 300/ ton SGST benefit for clinker plant for 3MT which is new
and will be commissioned by March 31, 2024.
In addition, the
Guwahati grinding unit will have tax benefit as it will be at lower tax of 17%.
CAPEX:
For the clinker plant,
the company has expended around Rs 850 crore till December 2023, the company
will be expending around Rs 200 crore in Q4FY2024 and Rs 200 crore in Q1FY2025.
In total the capex for clinker unit is expected to be around Rs 1250 crore
against Rs 1300 crore budgeted earlier.
For Guwahati unit, the
company has incurred capex of around Rs 330 crore and will incur another Rs 55
crore in Q4 FY2024. The total CAPEX of Guwahati plant has declined from Rs 430
crore to Rs 385 crore.
For Silchar
plant the company has incurred Rs 20 crore towards land acquisition.
Prices:
Prices improved by Rs
7 per bag in North east while it
declined by Rs 15-20 per bag in Bengal and Bihar when compared to Q2FY2024.
Prices have remained
more or less stable since exit.
Cash: The company had
cash balance of Rs 115 crore as on Dec31,2023. The company will raise debt of Rs 150
crore in Q4FY2024 and Rs 100 crore in Q1FY2025 which has to be paid back in
subsequent quarters.
Outlook:
The company expects
volume growth of 8-10% YoY in Q4FY2024.
The company expects
volume growth of 18-20% YoY in FY2025.
The company majority
of the sales is through trade and there
is lot of opportunities in institutional sales in the North east region as hydro
power projects and lot of big bridges are being constructed.The company also plans
to gain market share from existing players.
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