Last updated: 13 Nov, 2020 | 08:49 am
Shree Cement posted a 77% increase in Net Profit year-on-year for quarter ending September 2020 on back of lower costs despite lower pricing.
Net Profit: Net profit stood at ₹ 547.25 crore, a 77.1% year-on-year increase.
Revenue: Revenue grew 7.8% year-on-year to ₹ 3,022.4 crore.
EBITDA and Margin and Volume: EBITDA grew 17% year-on-year to ₹ 988 crore, while the EBITDA margin increased by 2.6% to 32.7%. These assisted for an overall volume growth of 14% year-on-year beating the industry growth.
Capital Expenditure: An intermediate target of 57 mn MT is set to be achieved in the next 3 years with an overall target of 80 mn MT in the next 6-7 years from the current level of 40mn MT. Raipur third clinker line is to be ready by Q1FY23, with an estimated capex of around ₹ 900 crore. The capex is estimated to be ₹ 1200-1400 crore for FY21.
UAE Exposure: With the low cement demand, in and around UAE, the operations aren’t performing well. There is no plan to dispose of the asset as the management expects things to stabilize in the coming 2 years.
Credit Rating: The rating stood unchanged at CARE A1+ for the commercial papers issued.
Debt-to-equity ratio was 0.14. This ratio measures the financing used to run operations, a lower ratio shows a company has more owned capital than borrowed, and this about the strengths of the company.
Debt service coverage ratio: This ratio measures the operating profit available to the company, to service its all debt payment related obligations. The ratio was at 2.74 showing ability to pay the obligations due.
Interest Service Coverage Ratio: Unlike debt service, this ratio includes only the financing costs which are supposed to be covered by companies’ EBIT (Earnings before interest and tax). The ratio was at 14.37, implying solid interest repayment capability.
Shree Cements was up 2.51% after the results. Demand is on the rise in the rural and semi-urban areas along with government infra projects. The same is expected to be firm and stabilize as the economy opens in the future. With management expecting to double capacity in the next 6-7 years, the above average industry growth can be seen continuing in the coming years.