Cement – Q1FY22 Preview: Resilient performance expected in quarter

Common pan-India costs up 6% q-o-q throughout Q1FY22 led by 11% q-o-q rise in East and 6-7% q-o-q enhance in South and West.

Whereas YoY in addition to q-o-q comparability in Q1FY22e just isn’t significant given the various diploma of lockdown/restrictions because of Covid, trade is anticipated to put up ~45% y-o-y progress in volumes with virtually steady Ebitda/te y-o-y on a reported foundation. On a q-o-q foundation, volumes are anticipated to be down ~20% q-o-q vs ordinary ~10% q-o-q decline, whereas common Ebitda/te might rise 8-9% q-o-q regardless of value escalations. We anticipate common realisation to rise 5% q-o-q (Rs 230/te) and a pair of.6% y-o-y (Rs 130/te) and whole value/te to extend ~3% each q-o-q and y-o-y (Rs 120/te).

Consensus earnings are but once more more likely to be upgraded given better-than-expected costs sustaining thus far in seasonally weak monsoon necessitated by value escalations. Our protection universe FY22-23e Ebitda is 8-10% forward of consensus. SRCM & UTCEM stay our high picks. We additionally like ACEM, JKCE and TRCL. Key dangers: Decrease demand/costs and any regulatory intervention.

Trade volumes anticipated to develop 45% y-o-y/decline 20% q-o-q throughout Q1FY22e to 85mnte with pan-India utilisation at ~70%. West and South areas are more likely to lead quantity progress on y-o-y foundation on a low base. Equally, non-trade demand is more likely to be higher on a y-o-y foundation led by greater infrastructure demand. JKCE is more likely to lead with ~70% y-o-y quantity progress whereas UTCEM/ ACEM might even see 50-55% y-o-y progress.

Common pan-India costs up 6% q-o-q throughout Q1FY22 led by 11% q-o-q rise in East and 6-7% q-o-q enhance in South and West. Costs in North and Central areas are up 3-4% q-o-q. On a y-o-y foundation, common pan-India costs are probably up ~2.5% y-o-y. Non-cement revenues together with RMC, white cement/ putty, and so on are more likely to be down >30% q-o-q owing to Covid-induced restrictions.

Total value/te might enhance ~3% each q-o-q and y-o-y as sharp enhance in variable prices are more likely to be partially offset by higher value efficiencies. Common home pet coke costs are up 11% q-o-q and 85% y-o-y, whereas imported coal costs are up 16% q-o-q and 60% y-o-y. Equally, common diesel costs are up ~7% q-o-q and ~30% y-o-y.

Common Ebitda/te might rise 9% q-o-q (~Rs 100/te) and a pair of% y-o-y to Rs 1,353/te for our protection universe. Ebitda progress is more likely to be robust at 40-70% y-o-y for many corporations underneath our protection. TRCL is more likely to lead with Ebitda/te of >Rs 1,600/te adopted by SRCM and DALBHARA at ~Rs 1,500/te.