Shree Cement Reports Subdued Numbers For The June Quarter

Shree Cement announced its Q4FY13 results yesterday. Its revenues have remained flat to Rs 1441 crore in the quarter as against Rs 1436 crore in Q4FY12. The net profit of the company has declined by 19% to Rs 284 crore on a yearly basis (YoY).

The company follows a multi-brand strategy and is known for its brands such as Shree Ultra, Bangur and Rockstrong.

It generates revenues from 2 main segments (Cement and Power). Cement is the main segment of the company and has reported a 10% decline to Rs 1140 crore on a YoY basis. The Power segment has posted 50% growth in revenues and stood at Rs 455 crore on a YoY basis.

Overall, the EBITDA margins of the company have declined to 26.32% in Q4FY13 as against 33.50% in Q4FY12.

The company has recommended a final dividend of Rs 12 per equity share of a face value worth Rs 10 which makes for a total dividend of Rs 20 per share in 2013. This gives an effective dividend yield of 0.5% on the CMP of Rs 4145.

A decision on Shree Cement's appeal before the Competition Appellate Tribunal(COMPAT) against a penalty imposed by the Competition Commission of India of Rs 397.51 crore remains pending.

During the quarter, the company has commissioned a clinker unit at Bangur city with a capacity of 5000 tonnes per day.

The share price of the company has declined by 11.81% on a year to date basis, indicating a crack in investors’ confidence in the overall sector due to a slowdown in the economy. Hence, the stock is not worth recommending.