Shankara Building Products Ltd's consolidated revenue for the quarter came in at Rs785.22cr, up by 32.7% yoy. The operating profit for the quarter increased by 24.7% yoy to Rs48.81cr. However, the EBITDA margin declined marginally by ~40bps yoy to 6.2% in Q1FY19. The adjusted net profit after tax (attributable to the owners) stood at Rs19.46cr, up by 13% yoy. The revenue and EBITDA are in-line with the street estimates of Rs715cr and Rs49cr. However, the PAT missed the street estimate of Rs22cr by 11%.
• The increase in revenue is on account of higher volumes and improvement in segment mix of the company during the quarter.
• Gross margin of the company during the quarter declined by ~129% yoy to 12.1% in Q1FY19. This is on account of drop in net realization under both the segments despite improvement in product mix for the company during the quarter. The mix under retail segment vs. channel & enterprise segment for the quarter stood at 51:49 as against 46:54 in Q1FY18.
• The marginal drop in EBITDA margin is also on account of increase in employee benefits expense by 36% yoy to Rs17.45cr in Q1FY19.
• The finance cost increased significantly during the quarter by ~41.5% yoy to Rs13.87cr. This led to a drag in the net profit of the company.
• Effective tax rate of the company increased marginally to 36.5% in Q1FY19 vs. 35.2% in Q1FY18. This led to further drag in the net profit of the company.
• Retail segment – Segment revenue increased by 48.8% yoy to Rs401.86cr in Q1FY19 on account of higher volumes. The segment EBIT increased by 38.4% to Rs41.53cr with a drop in EBIT margin by ~78bps to 10.3% in Q1FY19. However, the overall EBITDA margin was sustained due to shift in product mix under this segment.
• Channel & Enterprise – This is a low margin segment for the company. The segment revenue increased by 19.2% yoy to Rs383.36cr backed by volume growth in Q1FY19. However, the segment EBIT declined by 1.6% yoy on account of likely drop in realizations. The segment EBIT margin declined by ~100bps to 4.7% in Q1FY19.
Shankara Building Products Ltd is currently trading at Rs. 1,634.10, up by 10.7 points or 0.66% from its previous closing of Rs. 1,623.40 on the BSE.
The scrip opened at Rs. 1,560.50 and has touched a high and low of Rs. 1,648 and Rs. 1,560.50 respectively. So far 85,887 (NSE+BSE) shares were traded on the counter. The stock is currently trading below its 200 DMA.
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