Indian conglomerate Orient Paper &Industries saw net profits climb toRs 775 million (+41% yoy) led by higher cement prices & other income. Revenues at Rs 6.96 billion (+27%), Cement (+22%) , Electricals (+35%) & Paper (+24%).
Cement revenues grew 22% yoy to Rs 3.34 billion as realizations improved 29% yoy and 15.6% qoq led by price hikes in Orient’s key markets of AP and Maharashtra. Increasing costs remain a key concern however, as domestic coal price hike yet to reflect in P&F costs.
Impacted by subdued demand growth in southern region, Orient’s cement volumes declined 5.4%yoy (+26.4% sequentially). Cement realizations surprised positively and jumped 29%yoy & 16% qoq to Rs 3376/t as Orient’s key markets AP, Maharashtra and Gujarat witnessed series of price hikes during Q4FY11.
Though sustainability of recent levels of cement prices remain uncertain, the recent sharp price hikes have meant that Q4FY11 exit prices are ahead of expectations. Hence even after factoring in a cement price decline of 8.5% over Q4FY11 averages, analysts see that Orient’s net realisation for FY12 would still be up by approx 13% yoy, which in turn is expected to drive 27% yoy growth in the company’s cement EBIDTA in FY12.