Earnings Review
Shree Cement PAT beats Street, dn YoY on lower sales volume
This story was originally published at 18:58 IST on 11 November 2024
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--Shree Cement: Jul-Sept premium pdts sale 15% of total trade sales volume
--Shree Cement Jul-Sept operating profit INR 5.9 bln vs INR 9.2 bln qtr ago
--Shree Cement Jul-Sept sales volume 7.60 mln tn, down 7% on year
--Shree Cement Jul-Sept operating profit INR 5.93 bln vs INR 8.70 bln yr ago
--Shree Cement Apr-Sept revenue INR 85.62 bln vs INR 95.31 bln year ago
--Shree Cement Apr-Sept net profit INR 4.11 bln vs INR 10.72 bln year ago
--Shree Cement Jul-Sept revenue INR 37.27 bln vs INR 45.60 bln year ago
--Shree Cement Jul-Sept net profit INR 931.3 mln vs INR 4.9 bln year ago
--Analysts saw Shree Cement Jul-Sept net profit INR 789.36 mln
--Shree Cement Jul-Sept net profit INR 931.3 mln
By Anand J.C.
MUMBAI – Shree Cement Ltd.'s September quarter net profit was higher than analysts' estimates even as it fell in comparison to the same quarter in the previous year. The Kolkata-based cement manufacturer reported a year-on-year drop in its bottom line for the second consecutive quarter due to lower revenue in the reporting quarter. Sales volume of the company in the September quarter dipped 7% on year to 7.60 million tonnes.
Net profit of Shree Cement in the September quarter was INR 931 million, 81% lower on year but 15% higher than analysts' estimate of INR 789.4 million. Sequentially, the net profit of Shree Cement declined 70.7%.
Shree Cement's revenue from operations was INR 37.27 billion in the latest quarter, 18.3% lower than INR 45.59 billion in the year-ago quarter. The Street was expecting a revenue of INR 39.47 billion. Other income in the September quarter was INR 1.78 billion, 40.9% higher on year.
The operating profit of Shree Cement in the trailing September quarter was INR 5.93 billion, 32% lower on year and 35% lower sequentially. The earnings before interest, taxes, depreciation and amortisation margin in the latest quarter was 15.9%, 316 basis points lower on year, as per Informist calculations. Analysts had estimated an EBITDA of INR 6.28 billion in the September quarter, and an EBITDA margin of 15.90%.
JUL-SEPT EXPENDITURE
Total expenses of the company in the September quarter were INR 38.60 billion compared to INR 40.90 billion in the same quarter a year ago. The cost of materials consumed dipped to INR 3.40 billion, 18.2% lower on year, while employee benefits expenses ticked up 7% on year to INR 2.50 billion in the latest quarter.
Shree Cement's depreciation and amortisation expenses doubled on year in the September quarter to INR 6.69 billion. The company's power and fuel expenses were INR 10.01 billion in the September quarter, 27% lower on year. Freight and forwarding expenses decreased 6.2% on year to INR 8.91 billion.
The company got a tax credit of INR 483.70 million in the September quarter, having incurred a tax expenditure of INR 1.05 billion in the year-ago quarter.
Shree Cement's net profit in Apr-Sept was INR 4.11 billion, 62% lower than INR 10.72 billion in the same period a year ago. Revenue from operations in Apr-Sept was INR 85.62 billion, 10.2% lower on year.
"Despite the challenging demand conditions on account of prolonged monsoon and softer prices faced by the industry, the company’s focus on maintaining brand equity, product premiumisation, and improving geo-mix helped maintain its realisation on a sequential basis," the company said in a press release. Cost optimisation and operational efficiency measures drove the company's EBITDA in Jul-Sept, it said.
The company's sale of premium products in the September quarter was 15% of its total trade sales volume, it said.
CAPEX, OUTLOOK
Shree Cement expects to commission its ongoing expansion projects in Rajasthan, Karnataka, Chhattisgarh, and Uttar Pradesh by the first quarter of Apr-Mar (2025-26), it said in the release. The company aims to achieve a capacity of over 80 million tonnes per annum by 2028.
Cement demand in the September quarter remained subdued owing to an intense, prolonged monsoon which impacted construction activities across sectors, the company said. Shree Cement expects demand to pick up in the second half of FY25 on the back of budgetary allocations by the government and on-ground execution of infrastructure projects.
The company expects rural demand to be higher in the upcoming quarters owing to good kharif crop and improved farm prices. Further, the company expects spending under the Pradhan Mantri Awas Yojana in rural and urban areas, coupled with an increase in industrial and commercial capital expenditure to drive cement demand in the near future.
Shree Cement disclosed its September quarter earnings post market hours. On Monday, shares of the company closed 0.5% lower at INR 24,418.25 on the National Stock Exchange. End
Edited by Vandana Hingorani
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