Shree Cement reported mixed set of numbers for the quarter; revenue and EBITDA were marginally better than estimate, however, PAT missed the estimate (adjusting for onetime loss). Company reported revenue growth of 20.7% to Rs2,586.6cr, ~5% above consensus estimates. Due to sharp jump in the cost structure (power and other expenses), EBITDA declined by 7.3% yoy to Rs519.7cr, ~7% above estimates. EBITDA margin contracted significantly by 607bps yoy to 20.1%. Further, higher interest and depreciation cost coupled with lower other income led to PBT decline of 54.7% yoy. Further, due to one-time loss of Rs178.1cr, PAT declined by 76.7% yoy to Rs49.3cr. However, adjusting for that, Adj. PAT stood at Rs174cr, 5% lower than the estimate.
Cement segment reported 18% yoy growth in revenue to Rs2,407cr, however, EBIT declined by 87% yoy due to higher cost structure.
Reported net revenue for power (net of intersegment) jumped by 75.2% to Rs179.5cr with an EBIT of Rs168.1cr, up 5.8% yoy.
Interest cost jumped by 62.8% yoy to Rs51.4cr and depreciation was up by 46.3% yoy to Rs329.5cr.
Company reported one-time loss of Rs178.1cr on account of fair value loss of its investment in Preference Shares of Infrastructure Leasing and Financial Services Limited and IL&FS Financial Services Ltd. In August 2018, credit rating agencies have downgraded the IL&FS Group's credit rating to junk status.
Other income for the quarter also declined by 48.4% yoy. We believe junk rating of the IL&FS investment also weighed down on the other income.
Company has announced capacity addition of (a) 3.0MTPA at Cuttack, Odisha with an investment of Rs423cr and (b) 2.5MTPA at Kharsawan, Jharkhnad with an investment of Rs480cr. Both investments are to be funded through a mix of internal accruals and debt.
Shree Cement Ltd is currently trading at Rs. 15,391, down by 42.55 points or 0.28% from its previous closing of Rs. 15,433.55 on the BSE.
The scrip opened at Rs. 15,649.95 and has touched a high and low of Rs. 15,745.20 and Rs. 15,307.75 respectively. So far 30,815 (NSE+BSE) shares were traded on the counter. The stock is currently trading above its 200 DMA.
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