Shri Keshav Cements & Infra

Q2 FY23 – Concall Update

Changes

• Price Hike in this quarter
• they are adding addition 3 MW capacity of Solar plant in the existing land due to help of suppliers with no long term commitments

Financials

• This quarter is the lower revenue generating quarter due to monsoon session
• The effect of Pet coke price increase has been seen in this quarter and this is also due to FIFO accounting as the prices have declined in Pet coke next quarter will be good

Cyclicality of the cement business

• H1 is lower revenue quarter and H2 generates more revenues and Q4 is the highest revenue generating one in the industry

Geographical Advantage

• they are only customer for ~20 suppliers of lime stone which is the reason for lowest limestone prices

Guidance

• By July capacity will start running – which is lower than the usual time takes for expunction and by 2026 the capacity will reach 100% efficiency
• They are expecting to achieve EBITDA margins of around INR900 to INR1,000 per ton, taking into account the expected savings and efficiency improvements compared to 800 to 900 per ton
• Starting from March, the company will be making aggressive investments in marketing. This involves expanding its reach to more retail points, increasing the number of sales executives, bringing in new marketing personnel, implementing a fresh marketing strategy, and reaching out to institutional and government buyers for bulk orders.
• As the prices have hiked to increase capacity they may consider discounts to customers for more brand visibility
• They are aiming to become Tier-2 cement company
• optimistic on demand side in the existing geographies to absorbed the supply and they feel 1mill ton is vary insignificant in the industry
• As the capacity will increased they can bid for more projects which now they cannot tap and approach bigger customers, institutional buyers, and then give better payment terms

Strictly, No Recommendation
Open for discussion!!

Disclosure: Tracking position, for educational purposes & can be biased