Orient Cement Q1FY22: Passing on cost pressure aided margin, says management

Orient Cement posted strong pricing gains across the south and west regions aided the topline improvement in its first quarter results. The stock is up 3.8 percent on June 3 at the time of publishing and over the past three trading sessions has shot up from Rs 150 a piece to Rs 168 a piece.

The reported EBITDA looks strong and is up around 25 percent on a quarter-on-quarter (QoQ) basis. Deepak Khetrapal, MD and CEO, Orient Cement discussed the performance.

“Q2FY22 volumes may remain similar to Q1FY22. That is our current prognosis,” he said.

The company has the risk of fluctuating cement prices . The management has said that it has been able to pass on the cost increases to the customers in this cycle.

“As a result of that, pricing in Q1FY22 has been very strong and the prices right now are softer than what we saw in Q1FY22,” he said.

Khetrapal expects to see pressure on EBITDA per tonne at least in Q2FY22 and in part of Q3FY22. Last year the company did 5 million tonne (mt) of cement volumes.

“In Q1FY22 we have already picked up half a million tonne additional compared to what we have done last year Q1. So if we are able to continue with the path, I am quite sure that in Q2 and Q3 we might be able to see some growth over last year’s volumes. So 6 million tonne - I am still not going back from there,” he said.

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

“As a result of that (monsoon), the current demand as we see it is more in-line with what we have seen in Q1FY22. Compared to last year, there is a momentum. However, comparing that with FY20 similar time, we are still at about 90 percent or thereabouts,” he shared.