Sagar Cement spurts after Q1 PAT jumps 22% to Rs 36 cr

Shares of the cement maker spurted 12.22% to Rs 521.75 after consolidated net profit jumped 22% to Rs 36 crore on 23.3% decline in net sales to Rs 264.12 crore in Q1 June 2020 over Q1 June 2019.

Consolidated profit before tax (PBT) soared 16.3% to Rs 55.04 crore in Q1 June 2020 as against Rs 47.32 crore in Q1 June 2019. Current tax expense for the quarter surged 185.9% at Rs 8.92 crore as against Rs 3.12 crore in Q1 June 2019. The result was declared after market hours yesterday, 29 July 2020.

Sales volume skid 32% to 5,55,312 MT in Q1 FY21 as against 8,20,155 MT in Q1 FY20, due to suspension of operations due to nationwide lockdown. Consolidated operating EBITDA jumped 11% to Rs 87.01 crore in Q1 FY21 as against Rs 78.62 crore in Q1 FY20. Operating EBITDA margin improved to 33% in Q1 FY21 compared with 23% in Q1 FY20.

Lower fuel cost and optimization of other expenses resulted in lowering total cost by Rs 49 per ton. The ongoing greenfield projects of Satguru Cement, Madhya Pradesh and Jajpur Cements, Odisha are progressing as per schedule, the company said.

Gross debt reduced marginally by 1.20% to Rs 482.12 crore in Q1 FY21 as against Rs 488.01 crore in Q4 FY20. Debt equity ratio stood at 0.33% in Q1 June 2020 as compared to 0.34% in Q4 March 2020. Cash & cash equivalents soared 47.68% to Rs 18.83 crore in Q1 June 2020 over Rs 12.75 crore in Q4 March 2020.

Commenting on the Q1 performance, Sreekanth Reddy, the joint managing director (MD) of Sagar Cements, stated: "Our performance for the quarter was expectedly soft given the challenges surrounding COVID-19 pandemic. Construction activities for large part of the quarter remained weak amidst lock down, labor unavailability and supply chain disruption in turn impacting the sales volumes for the quarter. However, calibrated reopening of the economy has resulted in improving the demand and pricing environment."

"Further, our efforts towards enhancing our efficiencies and lowering costs have helped us maintain our margins despite lower operating leverage. While lower input prices did contribute towards sustaining the margins, our recent initiatives in terms of commissioning of CPP and Bayyavaram expansion have also started to make meaningful contribution to the operational profitability. We expect further improvement in the performance post the completion of Satguru & Jajpur cements acquisition as the same would give us a foothold in faster growing markets"

"Going ahead, while the near-term outlook remains challenging, we believe that Govt.'s efforts towards strengthening the country's infrastructure coupled with pick up in private capex cycle should support demand and pricing environment," he signed off.

Meanwhile, the board has recommended a dividend of Rs 2.50 per equity share (i.e. 25%) on the 2.35 crore equity shares for FY 2019-20. Sagar Cements is engaged in manufacturing clinker and ordinary portland cement (OPC).

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