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Shree Cem: Net Profit Tanks 54% YoY in 4QFY17 - Views on News from Equitymaster
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Shree Cem: Net Profit Tanks 54% YoY in 4QFY17
May 19, 2017

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
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