Shree Cement - Result Analysis Q1 FY21

Shree Cement - Result Analysis Q1 FY21

Total income from operations 2,480 Crs 

3,303 Cr (-24.91%) YoY | 3,415 Cr (-27.38%) QoQ 

Year ending revenue: 12,868 Cr Vs. 12,555 Cr (2.49%)

Net Profit of 330.3 Cr 

382.2 Cr (-13.39%) YoY 536.6 Cr (-38.43%) QoQ 

Year ending Net profit: 1,540 Cr Vs. 1,006 Cr (53.04%)

EPS (in Rs.) 91.3

108.9 YoY | 148.5 QoQ 

Year ending EPS: 435.3 Vs. 288.83

View: Result is overall good. YoY and QoQ revenue declined but profit slightly declined in YoY due to better cost control mechanism and operational efficiency. 

Business Updates & Highlights:

EBITDA in Q1FY21 was around INR 687.9 Cr Vs. 947.2 Cr in Q1FY20 Vs. 1056.1 Cr in Q4FY20 therefore declined by 27.4% in YoY and 34.9% in QoQ. EBITDA margin in Q1FY21 was around 27.8% Vs. 28.7% Vs. 30.9% in QoQ. 

Power & fuel cost in Q1FY21 was around INR 458.1 Cr Vs. 748 Cr in Q1FY20 therefore decreased by 38.8% in YoY. 

Employee expenditure in Q1FY21 was around INR 205 Cr Vs. 220 Cr in Q1FY20 therefore declined by 6.8%.

Freight & Forwarding expenditure in Q1FY21 was around INR 581 Cr Vs. 683 Cr in Q1FY20 therefore declined by 14.9% in YoY.

Financial

ROE and ROCE is around 13% and 15% respectively and book value per share is around INR 3,650 and share is currently trading at 6.1x of its book value. Company is currently trading at annualized PE of around 58 which is very high as per Industry benchmark. Promoter holding in the company is around 62.5% which is very good and stable. FIIs and mutual fund hold around 11.5% and 8.7% respectively. 

Position: Share strong support price is INR 21,100. Long term investor can continue with the company. 

Share View: Share price high 25,341 (52 week) and now 22,388. Shree Cement is an Indian cement manufacturer. it is one of the biggest cement makers in Northern India. It also produces and sells power under the name Shree Power and Shree Mega Power. 

Opportunities

Top 3 cement group in India (in terms of cement capacity). Total cement capacity is 41.9 MTPA (Including subsidiaries) and Power Capacity is 659 MW (including subsidiaries). Despite Covid-19 outbreak the company was able to maintain their bottom line and overall positive scenario. Strong rural market position with strong brand and dealership network. Maintained good sales growth in last 5 year and it was above 17% and profit growth above 14%. Strong reserve and surplus which was above 13.1K Cr as of March 2020 and strong operating cash flow which was around INR 3.9K Cr as of March 2020. Liquidity position is also sound in the company and average debtor receivables was around one month. 

Risk

Commercial space sector may perform very slow due to demand will overall contract in upcoming months due to global pandemic. Further slow spending by Govt in Infrastructure segment. Expensive valuation as compare to other peers like Ambuja, Ultratech, JK Cement, Birla Corp etc. 

Disclaimer: The information provided herein is based on publicly available information and other sources believed to be reliable, but involve uncertainties that could cause actual events to differ materially from those expressed or implied in such statements. The document is given for general and information purpose and is neither an investment advice nor an offer to sell nor a solicitation. While due care has been exercised while preparing this document, we do not warrant the completeness or accuracy of the information. We will not accept any liability arising from the use of this material. The recipient of this material should rely on their investigations and take their own professional advice.

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