Sagar Cements, a medium-sized cement manufacturer, has reported strong financial results for the quarter ending December '23, driven by positive demand trends in key markets. However, the company fell short of its ambitious growth targets for cement volumes, leading to a revision in its growth guidance for FY24.
In Q3, revenues increased from Rs 576 crore to Rs 669 crore, marking a 16 percent year-on-year (YoY) growth. Cement volume for the quarter reached 1.41 million tonnes, a 14 percent YoY increase, primarily due to higher utilization levels at recently acquired units. Improved product mix contributed to higher realizations both quarter-on-quarter (QoQ) and YoY. The trade mix’s share decreased from 65 percent to 56 percent sequentially, attributed to the expansion of the distribution network and a stronger retail presence.
While gross margins decreased due to rising raw material costs (gypsum and slag), favorable power and fuel prices, along with increased cement realizations, led to the operating margin reaching an 8-quarter high in the October-December period. Operating margins expanded by 470 basis points YoY to 13.0 percent, and EBITDA (earnings before interest, tax, depreciation, and amortization) surged by 83 percent YoY to Rs 87 crore.