Margin Impact Assisted by Cost Pressure, Says Management

Orient Cement posted strong price gains in the southern and western regions, which helped to improve sales from its first quarter results. The stock is up 3.8% on June 3 at the time of publication and in the last three trading days it has gone from Rs 150 a piece to Rs 168 a piece.

Reported EBITDA looks strong and is up around 25% quarter on quarter. Deepak Khetrapal, MD and CEO, Orient Cement discussed the performance.

“The volumes of T2FY22 can remain similar to those of T1FY22. This is our current prognosis, ”he said.

The company runs the risk of fluctuating cement prices. Management said it was able to pass cost increases on to customers during this cycle.

“As a result, prices in the first quarter of fiscal 22 were very high and prices are currently lower than what we saw in the first quarter of fiscal 22,” he said.

Khetrapal expects to see pressure on EBITDA per tonne at least in T2FY22 and partly in Q3FY22. Last year, the company produced 5 million tonnes (mt) of cement volumes.

“In the first quarter of fiscal 22, we have already recovered an additional half a million tonnes compared to what we did last year in the first quarter. So if we are able to continue down this path, I’m quite sure that in the second and third quarters we could see some growth over last year’s volumes. So 6 million tonnes – I still can’t get over it, ”he said.

The situation has not yet returned to pre-pandemic levels and then there is the monsoon lull.

“As a result of that (the monsoon), the current demand as we see it is more in line with what we saw in the first quarter of fiscal 22. Compared to last year, there is momentum. However, comparing that with the same period in FY20, we’re still at around 90 percent or so, ”he shared.

For the full interview, watch the accompanying video.

(Edited by : Abhishek Jha)

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