Shree Cement Beats Estimates, Net Up By 140%
DSIJ Intelligence / 30 Apr 2013
Shree Cement has reported a meager 6% growth in its topline to stand at Rs 1456.84 crore. Its net profit grew by 2.4x to Rs 274 crore which is even better than market expectations. The street was expecting a net profit of Rs 238 crore but the company beat this estimates by 15%. Tracking this outstanding result, the shares of the company ended 2% up today at Rs 4410 a piece.
In the quarter, revenues from the cement business of the company declined by 0.5% while that from the power business grew by 27.8%. The poor performance in its topline is, however, overcome by the company as it reported 170 basis points of expansion in the EBITDA margins.
The rise in its margins can be attributed to it’s the decline in material costs by more than 3% on a YoY basis. As percentage of sales, the material costs reduced from 10.59% to 9.66%. The depreciation expenses too declined by a whopping 46% to Rs 126 crore. The power and fuel expenses were also reduced by nearly 2%. While major expenses have risen, its employee cost and other expenses have increased by more than 20% each. The total cost, however, remained down by nearly 5% thus helping the company improve its EBITDA margins.
On the non-operating side, Shree Cement has seen its other income reduce by 45% to Rs 42.78 crore. The finance cost increased by 9% to Rs 45 crore. The reduction in taxes which stood 70% down to Rs 17.63 crore provided the boost to the stock.
The company has also declared a dividend of Rs 8 per share during the quarter taking the full year dividend to Rs 16 per share.
The company is yet to publish a press release but during one of the media interviews in the last quarter, the MD, H M Bangur has said that the company expects a good contribution from its power business. According to him, the power business will improve its EBITDA margins as the cost of imported coal is lower at the moment. The MD added that the company’s cement capacity utilisation would increase to 100% which would be positive on the business.
We have also recommended this stock in our magazine and would advise readers to hold the counter.
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