Shree Cement Posts Good Result For Sept 2012 Quarter

Shree Cement, a major cement and power conglomerate, has reported strong result for the September quarter 2012. The net sales of the company  is up by 54.6 per cent on a YoY basis to Rs 1,323 crore while net profit is significantly up by 492 per cent on a YoY basis to Rs 228 crore. The higher jump is due to the low base effect, better sales volume (Higher Utilisation of the capacity) and higher realization during the quarter.

This year delayed monsoon has helped the cement companies in terms of higher pricing and  steady demand which resulted into better realization and higher sales volume during the quarter. The sales volume has increased by 21 per cent YoY to 3 million tonnes while the realisation has jumped by 16 per cent on a YoY basis to Rs 3,950 per tonne. One of the major reasons for the jump in the sales volume was increase in the capacity utilisation up by 40% at 90% as against that of 70% in the corresponding period last year.

Expansion Plan

Shree Cement plans to increase its cement grinding capacity from the current 13.5 MTPA to 15.5 MTPA by setting up a 2 MTPA grinding unit at Bihar which is expected to be commissioned by December 2013. The company will also add 4 MTPA of clinker capacity at its current location in Ras, Rajasthan, which is expected to be completed by June 2013 and June 2014 respectively.

The company has posted strong result for the September 2012 quarter and we believe it will continue its strong performance in the coming quarter too. Cyclically, the second half of the fiscal remains better off than the first one as infrastructure and construction activities attain their peak levels. Further, with the retreat of the monsoon the cement companies have increased the cement prices in most of the regions by an average of Rs 15-20 per 50 kg bag. The jump in the cement prices coupled with renewed demand post monsoon will lead to better performance in the coming quarter.

For FY13 the industry will see much better demand growth as compared to FY12 mainly on the back of higher infrastructure spending by the government, renewed demand from the rural areas and due to the elections scheduled in some parts of the country. In FY12 the industry dispatch grew by 6.9 per cent and it is expected to further grow by 8-9 per cent in FY13.