Washout Q3. India Cements stock slips 3.5% after

Responding to earnings, the company’s shares fell 3.5 per cent on the NSE on Friday.

The company said its performance during the quarter was badly hit by record monsoon in southern states. Due to floods in many areas, construction activities have come to a standstill in many areas. The company said in a press release that this was further exacerbated by declining sales prices in the eastern and northeastern markets, from which the company withdrew as sales in those regions had become unprofitable.

As a result, sales volume fell 11% year-on-year (Yoy) to 21.08 lakh tonnes in Q3FY22 as against 23.77 lakh tonnes in Q3FY21. The company said its key markets in Maharashtra, Kerala, Tamil Nadu and Karnataka saw a slow recovery in economic activity after the pandemic. As a result, the capacity utilization stood at around 54% as compared to 61 per cent during the corresponding quarter of the previous year.

In addition, higher operating costs continued to impact the company’s operating performance. While net plant realizations for the quarter were up marginally more than 5%, variable cost of operations increased nearly 25% due to a substantial increase in fuel price. Its Ebitda in Q3FY22 stood at Rs 110 crore as compared to Rs 218 crore in the same quarter last year. Ebitda is short for earnings before interest tax depreciation and amortization.

Certainly, the increased input cost has been a problem for the entire cement industry. While cement companies across India have tried to pass on the increased operating costs through price hikes in the December quarter, weak demand in several sectors forced prices to pull back.

Meanwhile, India Cements’ management remains cautiously optimistic about the future in the backdrop of continued threat of a third wave of the pandemic, as well as risks of cost pressures from rising fuel prices and logistics costs.