Shree Cement Posts Third Quarter Results
Shree Cement Ltd recently posted its third quarter results for the fiscal of 2011. Few highlights of the company's Q3 result.
- (1888PressRelease) February 04, 2011 - Shree Cement Ltd recently posted its third quarter results for the fiscal of 2011. Few highlights of the company's Q3 result are:
• Revenue at INR 7.8bn reduced by 9.9% on YoY basis on the back of muted volume growth and lower realisation.
• Operating profit reduced by 54% YoY to reach INR 1.5bn, due to rise in raw material costs when measured as a percentage of sales. The lower operating profit was also due to sharp rise in staff costs (+28.4% YoY), power & fuel costs (+32% YoY) and freight costs (16% YoY).
• Cement production grew by 4.3% to 2.35MnT and realisation fell by 13.6% to INR 3,326/ton on yearly basis.
In addition, profit was further strained by higher interest out go at INR 204Mn (+63% YoY) and depreciation charges at INR 1,314Mn (+38.7% YoY). Consequently, PAT at INR 275Mn reduced by 83.6% on yearly basis. The profit would have been much lower had there been no tax reversal of INR 257Mn.
Outlook and Valuation
At the CMP, stock trading at 12x its FY12e EPS and 5.8x on EV/EBITDA basis. Given the higher competition from new capacities coming on stream in Northern region, higher input and fuel cost, we lower our price target to INR 1,900 (~7x EV/EBITDA of FY12e Accumulate.
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