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Shree Cem: Cement Demand Expected to Pick up Soon - Views on News from Equitymaster
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Shree Cem: Cement Demand Expected to Pick up Soon
Nov 11, 2016

Shree Cement has announced its financial results for the quarter ended September 2016. The company's sales and net profit increased by 17.7% YoY and 18.3% YoY respectively during the quarter. Here is our analysis of the results:

Performance Summary
  • Standalone net sales increased by 17.7% YoY during the quarter ended September 2016 driven by about 9% YoY growth in cement volume sales, about 6% growth in cement realisations. The power business grew by 5% YoY during the quarter.
  • Operating profit increased by 57.6% YoY.
  • EBITDA per tonne during the quarter increased to Rs 1300 from Rs 850 in the corresponding quarter of the previous year on account of lower power and fuel costs.
  • Operating margins expanded from 21.7% in 2QFY16 to 29.1% in 2QFY17.
  • Other income increased by 28.7% YoY during the quarter.
  • Depreciation and finance costs increased by 76.6% YoY and 25.0% YoY respectively.
  • Healthy topline growth and improved margins caused net profits to increase by 18.3% YoY during the quarter.
  • Net profit margins remain stable at 12.9%.
  • During the six month period ended September 2016, sales and net profits increased by 29.7% YoY and 128.0% YoY respectively.

    Standalone Financial Performance Snapshot
    (Rs m) 2QFY16 2QFY17 Change 1HFY16 1HFY17 Change
    Sales** 19,153 22,540 17.7% 36,399 47,219 29.7%
    Expenditure 14,991 15,978 6.6% 28,669 33,348 16.3%
    Operating profit (EBITDA) 4,163 6,563 57.6% 7,731 13,871 79.4%
    EBITDA margin 21.7% 29.1% 21.2% 29.4%
    Other income 958 1233 28.7% 1350 2211 63.8%
    Depreciation 2,448 4,322 76.6% 4,831 5,862 21.4%
    Finance costs 235 293 25.0% 498 569 14.2%
    Profit before tax & exceptional items 2,438 3,180 30.4% 3,752 9,650 157.2%
    Exceptional gains/(losses) 0 0 -240 0
    Profit before tax 2,438 3,180 30.4% 3,512 9,650 174.8%
    Tax -26 265 NA 7 1,659 NA
    Effective tax rate NA 8.3% 0.2% 17.2%
    Profit after tax 2,463 2,915 18.3% 3,505 7,992 128.0%
    Net profit margin 12.9% 12.9% 9.6% 16.9%
    No of shares (m) 34.8
    Diluted EPS (Rs)* 323
    P/E (times)* 47.3
    *trailing twelve month earnings
    **Sales are inclusive of excise duty
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