Sagar Cements reported a robust performance with EBITDA, PAT growth of 10%, 22%, respectively, in a challenging Q1FY21. The results were ahead of our estimates mainly on account of a sharp increase in cement prices in AP,...

NBIE Values your patronage- Vote for The Team in the Asia Money poll 2020. Click Here Highest EBITDA/mt driven by better realization Sagar Cements Ltd (SGC) has reported the highest ever quarterly EBITDA/mt of Rs1,567, which was primarily driven by higher cement realization and controlled operating costs despite weak utilisations. Key surprise and driver of earnings was realization, which at Rs4,756/mt increased by 31.5% QoQ and 13.4% YoY. The management during the previous conference calls had mentioned that pricing in its markets is at decadal low and unsustainable and we believe that the industry has...

Volume degrowth of SGC at 32% y/y was inline with industrydemanddegrowth.Consolidatedvolumesforthe quarterwas0.56MT.AccordinglynetsalesofRs2,641mn witnessed a decline of 23.3% y/y. Green shoots were particularly visible in rural segment demand and Government orders in Andhra during Q1 both are expectedtosustaingoingaheadaswell. EBITDA/te for Q1FY21 stood at Rs 1,568 (+64%...

by 11.6% y/y owing to softening of fuel prices and cost rationalizationmeasures,EBITDA/tedeclinedby18.8%y/y atRs533duetoweakpricingscenarioascomparedto last year (NSR was down ~7% y/y). Management has...

Sagar Cements Ltd (SGC) has reported good set of numbers for 4QFY20. Revenue at Rs3.04bn declined by 17% YoY due to 11% YoY decline in volume. Realization was better with 5.4% QoQ uptick, but it was down by 6.6% YoY. Operating cost/mt declined by 4% YoY as raw material cost and power & fuel cost were lower. As a result, EBITDA/mt came in at Rs534, which was almost double compared to 3QFY20 but down 18% YoY. SGC will continue to add capacity in Madhya Pradesh and Odisha which will take its total capacity from current 5.75mn mt to 8.25mn mt by June 2021. The current gross debt of the company stands at Rs4.9bn, which is expected to reach Rs8bn post completion of capex. Given the expected slowdown in...

Led by a demand slump in Andhra Pradesh from H2FY20, Sagar Cements faced challenges in FY20. While signs of a recovery were seen from January 2020, the virus outbreak led to weakness in demand and a nationwide lockdown. While operations have resumed gradually, the management said that its business is 50% below previous year's volumes and also cannot be confident whether this demand will sustain in coming months. Thus, the management expects FY21 to be a challenging year with volumes seeing a double digit decline, owing to utilisation levels remaining sub-par. We model...

Sagar Cements saw its operating performance decline during the quarter amid weakness in Andhra Pradesh & Telangana markets. Revenues dropped 18% YoY to | 262 crore (vs. I-direct estimate of | 268 crore) on the back of a fall in volumes to the tune of 17% YoY to 0.76 MT. Pricing pressure caused realisations to drop 1% YoY to | 3,431/t (vs. I-direct estimate of | 3,510/t). EBITDA margins contracted ~185 bps YoY to 7.6% YoY (vs. I-direct estimate of 11.7%). Total cost/tonne was up 1% YoY owing to inventory adjustment in the base quarter as well as higher other expenses, which was cushioned...

Better Operating Performance amid Muted Volume; Maintain BUY Sagar Cements (SGC) reported better-than-estimated operating performance despite steeper -than-expected decline in average realisation. Reported consolidated EBITDA stood at Rs424mn (+101% YoY and -46% QoQ), which was higher than expectations of Rs403mn, while EBITDA/ tonne stood at Rs596 vs. Rs294 in last year and Rs959 in 1QFY20. We note that better-thanexpected improvement in opex/tonne at Rs3,138 (-4.9% YoY and -3.1% QoQ) led to performance beat, despite average realisation declining by a steep 11% QoQ. A significant reduction in input cost/tonne (-2.7% YoY and -5.9% QoQ) mainly owing to reduction in power & fuel cost led to improved opex. Sales volume broadly remained muted at 0.71mnT (-0.9% YoY and -13.4% QoQ)....

Incremental business to come from eastern markets During FY19, Sagar Cements commissioned additional capacities, out of which 1.2 MT added in Vizag will serve the strong eastern markets. The company has sufficient headroom for growth. In the current scenario in AP & Telangana, demand is expected to remain flattish for the full year (the management mentioned 50% demand decline in September 2019 in the AP & Telangana markets). Hence, we expect additional volumes from the eastern markets to contribute to the company's growth. We slightly lower...

Increasing business from eastern markets to lead growth During FY19, Sagar Cements commissioned additional capacity of 1.5 MT enhancing its capacity to 5.75 MT. Out of new capacity, 1.2 MT was added in Vizag, which will serve the growing eastern markets. With volumes of 3.3 MT being clocked in FY19, the company has sufficient headroom for growth. Diversified presence supported volume growth during the quarter despite soft demand. We lower our estimates for volume and revenue growth to 7.4% and 11.5% CAGR, respectively, in FY19-21E factoring in the impact of...

Sagar Cements (SGC) reported a healthy performance in 4QFY19 (in line with our expectation) following contribution from realisation gains and volume jump. Strong jump in cement prices in SGC's key markets (Andhra Pradesh & Telangana) led to realisation jump of ~5% YoYat Rs3,874/tn. Volume jumped by a strong ~18% YoY to 0.94mt, indicating SGC balancing despatches (in eastern region) and realisation gains in key home markets. Effectively, revenues grew 24% YoY to Rs3.65bn (our estimate Rs3.65bn). Costs/tn stayed flat YoY at Rs3,221/tn, leading to ~60% jump in EBITDA to Rs6108mn (Rs387mn in 4QFY18). EBITDA margin gained 380bpsat 16.9%, while EBITDA/tn increased to Rs654 from Rs485 in 4QFY18. Higher interest costs and depreciation because of commissioning of additional capacity at Bayyavaram (1.5mt from 0.3mt) dragged...

Over four years i.e. FY16-19, Sagar Cements registered volume growth of 21% CAGR led by strong demand in its major markets and capacity addition. This was led by AP, Telangana region witnessing 40% growth in the recent times, which, however, is expected to slow down given the high base. Hence, considering the ramping up of the Vizag unit, the company via sales in the eastern region, we model in volume CAGR of 8.5% in FY19-21E to 3.9 MT. The capacity expansion in Madhya Pradesh and Odisha of 2.5 MT, which the company has undertaken would add to volumes only from FY22E...

Sagar Cements Ltd (SGC) reported poor operating performance with EBITDA at INR30 Cr against our estimate of INR34 Cr on account of higher operating cost and lower-than-anticipated realization.

ICICI Securities Ltd | Retail Equity Research Sagar Cements' results were a mixed bag. Though robust demand from infra fuelled the volume growth by 35.3% YoY to 0.92 MT, prices remained weak (down by 5.4% YoY to | 3470/t). As a result, revenues increased 28% YoY to | 319 crore (vs. I-direct estimate: | 320.4 crore) Margins were under pressure with EBITDA margin falling 322 bps YoY to 9.4% (vs. I-direct estimate: 12.3%) mainly led by higher raw materials expenses up 73% YoY to | 70 crore and 28% YoY on a per tonne basis...

Sagar Cements (SGC) reported a weak performance in 3QFY19 (weaker than our expectations) following higher-than-expected realisation decline and cost pressure. Weak cement prices in SGC's key markets (Andhra Pradesh & Telangana) led to realisation fall of ~6% YoY to Rs3,441/tn. Volume jumped by a strong ~35% YoY to 0.92mt, indicating strong demand but without pricing benefits. Effectively, revenues grew 28% YoY to Rs3.19bn (our estimate Rs3.24bn). Costs/tn, however, stayed flat YoY at Rs3,138/tn, leading to ~5% decline in EBITDA to Rs301mn (Rs316mn in 3QFY18). EBITDA margin fell 320bps to 9.4% while EBITDA/tn slipped to Rs327 from Rs465 in 3QFY18. Higher interest costs and depreciation because of commissioning of additional capacity at Bayyavaram (1.5mt from 0.3mt) dragged SGC into a quarterly loss of Rs41mn compared...

Weak Show; Cost Control Measures To Aid Performance From 1QFY20 Sagar Cements (SGC) reported a subdued performance in 2QFY19 (weaker than our expectations) following higher-than-expected realisation decline and cost pressure (partly non-recurring). Weak cement prices in SGC's key markets (Andhra Pradesh & Telangana) led to realisation fall of ~9% YoY to Rs3,564/tn. Volume jumped ~20% YoY to 0.72mt despite maintenance shutdown at one of its plants (BMM in Andhra Pradesh). Effectively revenues grew modestly by 10% to Rs2.58bn. Costs/tn shot up by ~4% YoY to Rs3,302, leading to a sharp 45% decline in EBITDA to Rs211mn (Rs384mn in 2QFY18). EBITDA margin fell by a steep 800bps to 8.2% while EBITDA/tn slipped to Rs294 from Rs643 in 2QFY18....

ICICI Securities Ltd | Retail Equity Research Sagar Cements' results were a mixed bag with revenues beating our estimates while earnings remained below our estimates. Revenues increased 9.6% YoY to | 257.7 crore (vs. I-direct estimate of | 245.4 crore) in Q2FY19 mainly led by 25.3% YoY growth in volumes to 0.72 MT (vs. I-direct estimate of 0.70 MT). However, realisation declined 12.4% YoY to | 3,584/t (vs. I-direct estimate of | 3,679/t) EBITDA margin declined 817 bps YoY to 8.2% (vs. I-direct estimate of...

Sagar Cements (SGC) has reported disappointing performance in 2QFY19,with higher-thanexpected decline in average NSR and higher power and fuel cost dragging its operational performance. Consolidated EBITDA declined by 45% YoY and 42% QoQ to Rs211mn vs. our estimate of Rs404mn and street estimate of ~Rs392mn. EBITDA/tonne stood at mere Rs294 compared to Rs642 and Rs492 in 2QFY18 and 1QFY19, respectively. Sales volume stood at 0.72mnT (+19.8% YoY and -3.3% QoQ). Prolonged shutdown of BMM unit (for 52 days) along with shutdown of 25 CPP led to higher operating cost in terms of higher power and freight cost (despite benefit from Bayyavaram unit) and other fixed cost. A sharp decline in operating profit and 29% YoY (+26% QoQ) surge in depreciation led to PBT loss of Rs106mn. We believe...

Sagar Cements Ltd (SGC) reported poor operating performance with EBITDA at INR 21.1 Cr against our estimate of INR 37 Cr

Realisation Falls Again; Gains Structural Strength With Cost Control Sagar Cements (SGC), as expected, reported a tepid performance in 1QFY19 (in line with our expectation) because of weak cement prices prevailing in its key markets (Andhra Pradesh & Telangana). Volume jumped 15% YoY to 0.74mt because of strong despatches, but realisation weakened 8% YoY to Rs3,739/tn. Revenues grew modestly by 6% to Rs2.74bn. Costs/tn declined ~3% YoY to Rs3,244, effectively leading to a 14% decline in EBITDA to Rs364mn (Rs425mn in 1QFY18). EBITDA margin fell 300bps to 13.3% while EBITDA/tn slipped to Rs496 from Rs666 in 1QFY18. PAT stood at Rs58mn compared to a loss of Rs1bn in 1QFY18, as interest costs and depreciation were not...