Shree Cem: Net Profit Tanks 54% YoY in 4QFY17

Shree Cement has announced its financial results for the quarter ended March 2017. While the company's sales increased by 19.3% YoY, net profit declined by 54.1% YoY respectively during the quarter. Here is our analysis of the results:

Performance Summary

• Standalone net sales increased by 19.3% YoY during the quarter ended March 2017.
• While the cement segment revenues (94.6% of sales) grew by 24.7% YoY, the power segment revenues declined by 2.5% YoY.
• Cement volume sales grew by about 11% YoY on the back of capacity ramp-ups in eastern India.
• Operating profit decreased by 3.9% YoY.
• Operating margins contracted from 23.7% in 4QFY16 to 19.0% in 4QFY17.
• The lower EBITDA margins in eastern India led to a drag on the overall EBITDA per tonne which dropped to Rs 820 per tonne.
• Other income plunged by 68.2% YoY during the quarter.
• Depreciation and finance costs increased by 1.5% YoY and 9.2% YoY respectively during the quarter.
• Despite the impressive growth in the topline, the contraction in EBITDA margins and the sharp drop in other income dragged net profit lower by 54.1% YoY during the quarter.
• Net profit margins contracted from 29.5% in 4QFY16 to 11.3% in 4QFY17.
• During the financial year ended March 2017, sales and net profits increased by 20.0% YoY and 7.4% YoY respectively.
• During the full year, the cement capacity utilisation rate stood at around 72% and the EBITDA per tonne was a little over Rs 1,000.
  
  

  Standalone Financial Performance Snapshot

  (Rs m)	4QFY16	4QFY17	Change	FY16	FY17	Change
  Sales**	22,491	26,834	19.3%	79,146	94,965	20.0%
  Expenditure	17,172	21,723	26.5%	61,509	71,293	15.9%
  Operating profit (EBITDA)	5,320	5,112	-3.9%	17,637	23,672	34.2%
  EBITDA margin	23.7%	19.0%		22.3%	24.9%
  Other income	4752	1510	-68.2%	7119	5077	-28.7%
  Depreciation	3,062	3,109	1.5%	10,658	12,147	14.0%
  Finance costs	288	314	9.2%	1021	1294	26.7%
  Profit before tax & exceptional items	6,722	3,199	-52.4%	13,076	15,308	17.1%
  Exceptional gains/(losses)	0	0		-240	0
  Profit before tax	6,722	3,199	-52.4%	12,837	15,308	19.3%
  Tax	92	154	66.9%	364	1,917	426.5%
  Effective tax rate	1.4%	4.8%		2.8%	12.5%
  Profit after tax	6,630	3,045	-54.1%	12,472	13,391	7.4%
  Net profit margin	29.5%	11.3%		15.8%	14.1%
  No of shares (m)					34.8
  Diluted EPS (Rs)*					384
  P/E (times)*					48.6

  *trailing twelve month earnings
  **Sales are inclusive of excise duty