Shree Cement dips 4% post June quarter results; here’s what brokerages say

Shares of Shree Cement slipped four.70 for every cent to Rs 21,335.40 on the BSE after the firm’s consolidated web income dropped 13.five for every cent on a year-on-year (YoY) foundation to Rs 330.35 crore for the June quarter of FY21 (Q1FY21). In comparison, the firm experienced posted a income of Rs 382 crore in the year-in the past quarter.

The company’s profits dipped 24 for every cent YoY to Rs two,480 crore from Rs three,302 crore in Q1FY20. On the operational entrance, earnings before curiosity, tax, depreciation, and ammortisation (Ebitda) slipped 22.three for every cent to Rs seven hundred crore though Ebitda/tonne stood at Rs 1,422. Ebitda margin expanded to thirty.1 for every cent from 29.seven for every cent.

“During the quarter finished 30th June, 2020, firm’s Indian operations had been partly affected because of to lockdown announced on account of Covid -19 pandemic by condition and central govt. The firm has taken into account the achievable effect of Covid-19 in planning of the money outcomes,” the firm mentioned in an exchange filing.

“As the situation of pandemic is nonetheless continuing, the extent to which the similar will effect Firm’s long run money outcomes is at the moment unsure and will depend on additional developments,” it mentioned.

At 10:27 AM, the stock was buying and selling three.88 for every cent reduce as in contrast to .eight for every cent attain in the S&P BSE Sensex.

Nirmal Bang taken care of ‘SELL’ on the stock but lifted its target selling price to Rs 18,659 from Rs 18,189 previously.

“Shree Cements has claimed first rate established of figures for 1QFY21. Ebitda at Rs seven hundred crore was three.four for every cent bigger than our estimate but various running parameters had been reduce than expectations. Revenue at Rs two,325 crore declined by 23 for every cent YoY as volume declined by 18.six for every cent YoY whilst realization declined by five.9 for every cent YoY,” the brokerage mentioned.

“We feel that as the economic climate returns to normalcy from the Covid shock, the latest pent-up desire from the rural segment will subside. Bigger pricing is also very likely to tumble as supply constraints lessen and monsoon effect on desire kicks in. The stock is at the moment buying and selling at elevated multiples of 22x FY22E EV/EBITDA and consequently we would wait for a correction to critique our rating on the stock,” it mentioned.

Kotak Securities mentioned Shree Cement’s Q1 general performance was ‘subpar’ but that it was too early to extrapolate.

“SRCM’s 1QFY21 Ebitda was weaker than our estimates led by reduce realizations. Volumes outperformed business with 19 for every cent yoy decrease having said that, realization was weaker than peers with a decrease of six for every cent yoy. Expenses, too, saw a sequential enhance as opposed to a decrease by most peers. We assume it is too early to be worried on SRCM’s potential to retain its expense and margin management position nonetheless, margin of protection is very low presented high quality valuations. Maintain Sell,” it mentioned.

Analysts at Motilal Oswal mentioned,”Even though we hold our estimates largely unchanged, we see problems linked to around-phrase margins for SRCM. These pertain to the hike in expense, but decrease in selling price in its running areas. The stability sheet ought to, having said that, reinforce additional on minimal capex below execution. We sustain Neutral as the latest valuation (16.8x FY22E EV/EBITDA) does not supply any upside.”.